Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~May 6, ~~2019,~~2020, the registrant had ~~44,653,847~~44,615,466 shares of common stock, $0.001 par value per share, outstanding

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
		(unaudited)						(unaudited)
ASSETS
Cash and cash equivalents	$	268,446		$	67,312		$	40,359		$	65,387
Securities available-for-sale (“AFS”)		1,042,940			809,569			961,477			1,014,966
Loans held for sale		501,860			507,643			520,721			503,036

Loans, net of deferred fees		4,374,208			4,293,669			4,805,513			4,547,633
Allowance for loan and lease losses (“ALLL”)		(20,500	)		(19,000	)
Allowance for credit losses (“ACL”)								(23,000	)		(20,800	)
Net loans		4,353,708			4,274,669			4,782,513			4,526,833

Premises and equipment, net								8,569			8,355
Investment in FHLB stock		17,250			20,307			21,168			21,519
Deferred taxes		9,534			13,251			9,132			11,079
Premises and equipment, net		8,694			9,145
Real estate owned (“REO”)		—			815
Goodwill and intangibles		97,717			99,482			96,672			97,191
Other assets		58,197			38,219			73,097			66,070
Total Assets	$	6,358,346		$	5,840,412		$	6,513,708		$	6,314,436

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	5,170,566		$	4,532,968		$	5,030,827		$	4,891,144
Borrowings		520,000			708,000			794,000			743,000
Accounts payable and other liabilities		63,420			40,260			65,798			66,423
Total Liabilities		5,753,986			5,281,228			5,890,625			5,700,567

Commitments and contingencies		—			—			—			—
Shareholders’ Equity
Common Stock, par value $0.001: 70,000,000 shares authorized; 44,652,847 and 44,496,007 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		45			44
Common Stock, par value $0.001: 70,000,000 shares authorized; 44,615,466 and 44,670,743 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively								45			45
Additional paid-in-capital		433,426			431,832			432,363			433,775
Retained earnings		162,792			128,461			185,852			175,773
Accumulated other comprehensive income (loss), net of tax		8,097			(1,153	)		4,823			4,276
Total Shareholders’ Equity		604,360			559,184			623,083			613,869

Total Liabilities and Shareholders’ Equity	$	6,358,346		$	5,840,412		$	6,513,708		$	6,314,436

	Quarter Ended September 30,				Nine Months Ended September 30,				For the Quarter Ended March 31,
	2019		2018		2019		2018		2020		2019
Interest income:
Loans	$	56,483	$	53,345	$	166,828	$	135,851	$	54,884	$	53,835
Securities AFS		5,349		3,579		17,700		10,576
Fed funds sold, FHLB stock and deposits		782		1,123		1,938		3,437
Securities										6,997		6,165
FHLB stock, fed funds sold and interest-bearing deposits										457		544
Total interest income		62,614		58,047		186,466		149,864		62,338		60,544

Interest expense:
Deposits		16,675		11,442		48,419		25,398		14,646		15,448
Borrowings		2,807		2,879		11,981		10,221		2,824		4,049
Total interest expense		19,482		14,321		60,400		35,619		17,470		19,497

Net interest income		43,132		43,726		126,066		114,245		44,868		41,047

Provision for loan losses		172		9		1,943		4,147
Provision for credit losses										4,079		540

Net interest income after provision for loan losses		42,960		43,717		124,123		110,098
Net interest income after provision for credit losses										40,789		40,507

Noninterest income:
Asset management, consulting and other fees		7,304		7,228		21,234		21,497		7,762		6,794
Gain (loss) on sale of loans		4,218		1,364		4,218		419
Other income		2,460		2,512		6,126		5,154		2,913		1,671
Total noninterest income		13,982		11,104		31,578		27,070		10,675		8,465

Noninterest expense:
Compensation and benefits		17,167		17,577		53,402		51,391		19,857		18,902
Occupancy and depreciation		5,450		5,590		15,485		14,524		5,512		4,868
Professional services and marketing costs		1,745		2,271		5,773		6,580		1,754		2,004
Customer service costs		5,920		4,854		13,592		11,449		2,372		3,389
Other expenses		2,412		3,675		9,669		12,993		3,362		3,782
Total noninterest expense		32,694		33,967		97,921		96,937		32,857		32,945

Income before taxes on income		24,248		20,854		57,780		40,231		18,607		16,027
Taxes on income		6,892		6,147		16,755		11,402		5,396		4,768
Net income	$	17,356	$	14,707	$	41,025	$	28,829	$	13,211	$	11,259


Net income per share:
Basic	$	0.39	$	0.33	$	0.92	$	0.70	$	0.30	$	0.25
Diluted	$	0.39	$	0.33	$	0.91	$	0.69	$	0.29	$	0.25
Shares used to compute net income per share:
Shares used in computation:
Basic		44,639,481		44,405,094		44,602,368		41,288,804		44,669,661		44,540,865
Diluted		44,935,308		44,852,107		44,876,614		41,790,656		44,952,669		44,798,306

														Common Stock								Accumulated Other
	Common Stock							Accumulated Other						Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings			Comprehensive Income (Loss)			Total
	Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings		Comprehensive Income (Loss)			Total
Balance: December 31, 2017	38,207,766	$	38	$	314,501	$	85,503	$	(5,091	)	$	394,951
Balance: December 31, 2018														44,496,007	$	44	$	431,832	$	128,461		$	(1,153	)	$	559,184
Net income	—		—		—		28,829		—			28,829		—		—		—		11,259			—			11,259
Other comprehensive loss	—		—		—		—		(9,485	)		(9,485	)	—		—		—		—			(759	)		(759	)
Stock based compensation	—		—		2,182		—		—			2,182		—		—		692		—			—			692
Cash dividend														—		—		—		(2,230	)		—			(2,230	)
Issuance of common stock:
Exercise of options	221,334		—		1,681		—		—			1,681		13,000		—		97		—			—			97
Stock grants – vesting of Restricted Stock Units	140,698		—		—		—		—			—		111,824		—		—		—			—			—
Acquisition	5,234,593		5		101,494		—		—			101,499
Capital Raise	625,730		1		11,341		—		—			11,342
Balance: September 30, 2018	44,430,121	$	44	$	431,199	$	114,332	$	(14,576	)	$	530,999
Balance: March 31, 2019														44,620,831	$	44	$	432,621	$	137,490		$	(1,912	)	$	568,243


Balance: December 31, 2018	44,496,007		$	44	$	431,832		$	128,461		$	(1,153	)	$	559,184
Balance: December 31, 2019																	44,670,743		$	45	$	433,775		$	175,773		$	4,276	$	613,869
Net income	—			—		—			41,025			—			41,025		—			—		—			13,211			—		13,211
Other comprehensive income	—			—		—			—			9,250			9,250		—			—		—			—			547		547
Stock based compensation	—			—		1,336			—			—			1,336		—			—		767			—			—		767
Cash dividend	—			—		—			(6,694	)		—			(6,694	)	—			—		—			(3,132	)		—		(3,132	)
Stock Repurchase	(1,800	)		—		(23	)		—			—			(23	)
Issuance of common stock:
Exercise of options	37,000			—		282			—			—			282		86,000			—		645			—			—		645
Stock grants – vesting of Restricted Stock Units	121,640			1		(1	)		—			—			—		83,057			—		—			—			—		—
Balance: September 30, 2019	44,652,847		$	45	$	433,426		$	162,792		$	8,097		$	604,360
Stock Repurchase																	(224,334	)		—		(2,824	)		—			—		(2,824	)
Balance: March 31, 2020																	44,615,466		$	45	$	432,363		$	185,852		$	4,823	$	623,083

Quarter Ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Net income
$
17,356

$
14,707

$
41,025

$
28,829

Other comprehensive income:

Unrealized holding gains (losses) on securities arising during
the period

2,883

(3,388
)

13,074

(13,406
)
Other comprehensive income (loss) before tax

2,883

(3,388
)

13,074

(13,406
)
Income tax (benefit) expense related to items of other
comprehensive income

619

(991
)

3,600

(3,921
)
Other comprehensive income (loss), net of tax

2,264

(2,397
)

9,474

(9,485
)

Less: Reclassification adjustment for gains (loss) included in net earnings

(316
)

—

(316
)

—

Income tax (expense) benefit related to reclassification adjustment

90

—

92

—

Reclassification adjustment for gains included in net earnings, net of tax

(226
)

—

(224
)

—

Other comprehensive income (loss), net of tax

2,038

(2,397
)

9,250

(9,485
)
Total comprehensive income
$
19,394

$
12,310

$
50,275

$
19,344

	For the Quarter Ended March 31,
	2020		2019

Net income	$	13,211	$	11,259

Other comprehensive income (loss):
Unrealized holding gains (losses) on securities arising during the period		772		(1,074	)
Other comprehensive income (loss) before tax		772		(1,074	)
Income tax expense (benefit) related to items of other comprehensive income		225		(315	)
Other comprehensive income (loss)		547		(759	)
Total comprehensive income	$	13,758	$	10,500

	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2019			2018			2020			2019
Cash Flows from Operating Activities:
Net income	$	41,025		$	28,829		$	13,211		$	11,259
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,943			4,147
Provision for credit losses - loans								2,279			540
Provision for credit losses – securities AFS								1,800			—
Stock–based compensation expense		1,336			2,182			767			692
Depreciation and amortization		2,256			2,084			763			738
Deferred tax expense		(107	)		767			1,722			734
Amortization of core deposit intangible		1,765			1,404			519			630
Amortization of mortgage servicing rights – net		1,199			741			361			320
Amortization of premiums on purchased loans – net		(4,231	)		(4,182	)		(4,174	)		(2,171	)
Gain on sale of loans		(4,218	)		(419	)
Gain on sale of REO								—			(118	)
Gain from hedging activities		(655	)		—			(36	)		(291	)
Loss on sale of securities		316			—
Gain on sale of REO		(742	)		—
Increase in other assets		(1,499	)		2,269
Increase in accounts payable and other liabilities		8,758			4,565
(Increase) decrease in other assets								(7,355	)		887
Decrease in accounts payable and other liabilities								(8,973	)		(2,028	)
Net cash provided by operating activities		47,146			42,387			884			11,192

Cash Flows from Investing Activities:
Net increase in loans		(628,176	)		(785,756	)		(263,552	)		(141,346	)
Proceeds from sale of loans		573,897			674,311
Proceeds from sale of REO		1,557			1,737			—			468
Purchase of premises and equipment		(1,805	)		(2,118	)		(977	)		(852	)
Recovery of allowance for loan losses		1,770			—
Recovery of allowance for credit losses								451			208
Purchases of AFS securities		(576,539	)		(350,400	)		(3,000	)		—
Proceeds from sale of AFS securities		283,893			9,982
Maturities of AFS securities		73,054			56,729			55,443			20,537
Cash acquired in acquisition		—			47,582
Sale (purchases) of FHLB stock, net		3,057			5,039			351			(2,427	)
Net cash used in investing activities		(269,292	)		(342,894	)		(211,284	)		(123,412	)

Cash Flows from Financing Activities:
Increase in deposits		637,598			747,595			139,683			35,734
FHLB advances and other Bank borrowings – net increase		(203,000	)		(510,570	)
Line of credit net change – borrowings (paydowns), net		15,000			(15,000	)
Net increase in FHLB advances								51,000			92,000
Dividends paid		(6,694	)		—			(3,132	)		(2,230	)
Settlement of swap		(19,883	)		—
Proceeds from sale of stock, net		282			13,023			645			97
Repurchase of stock		(23	)		—			(2,824	)		—
Net cash provided by financing activities		423,280			235,048			185,372			125,601

Increase in cash and cash equivalents		201,134			(65,459	)
Increase (decrease) in cash and cash equivalents								(25,028	)		13,381
Cash and cash equivalents at beginning of year		67,312			120,394			65,387			67,312
Cash and cash equivalents at end of period	$	268,446		$	54,935		$	40,359		$	80,693

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes	$	14,434		$	11,273		$	—		$	149
Interest		55,785			31,632			19,804			17,447
Noncash transactions:
Transfer of loans to loans held for sale	$	553,498		$	524,367		$	10,163		$	101,397
Mortgage servicing rights created from loan sales		1,861			2,646
Chargeoffs against allowance for loans losses		2,213			3,547
Acquisition reconciliation – goodwill/deferred taxes		—			300
Chargeoffs against allowance for credit losses								530			548

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 - UNAUDITED

The consolidated financial statements include First Foundation Inc. (“FFI”) and its wholly owned subsidiaries: First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB” or the “Bank”) and the wholly owned subsidiaries of FFB, First Foundation Insurance Services (“FFIS”) and Blue Moon Management, LLC (collectively referred to as the “Company”). All intercompany balances and transactions have been eliminated in consolidation. The results of operations reflect any interim adjustments, all of which are of a normal recurring nature and which, in the opinion of management, are necessary for a fair presentation of the results for the interim period presented. The results for the ~~2019~~2020 interim periods are not necessarily indicative of the results expected for the full year.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates.

The accompanying unaudited consolidated financial statements include all information and footnotes required for interim financial statement presentation. These financial statements assume that readers have read the most recent Annual Report on Form 10-K which contains the latest available audited consolidated financial statements and notes thereto as of and for the year ended December 31, ~~2018.~~2019.

Certain reclassifications have been made to the prior year consolidated financial statements to conform to the ~~2019~~2020 presentation.

Measurement of Credit Losses on Financial Instruments: In ~~July 2019,~~June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which introduces new guidance for the accounting for credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new model, referred to as the current expected credit losses (“CECL”) model, applies to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. Upon initial recognition of the exposure, the CECL model requires an entity to estimate the credit losses expected over the life of an exposure.

The Company adopted the amendments within ASU 2016-13 on January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for the periods beginning after that date are presented under Topic 326, while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP.

There was not any cumulative effect adjustment upon adoption. The Company elected to continue to account for purchase credit impaired (“PCI”) as a pool under ASC 310-30 and applied the prospective transition approach. The Company applied the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date. The effective interest rate on these debt securities was not changed.

Allowance for credit losses on investment securities: On January 1, 2020, the Company adopted the amendments within ASU 2016-13, which replaces the legacy US GAAP Other Than Temporary Impairment (“OTTI”) model with a credit loss model. The credit loss model under ASC 326-30, applicable to debt securities available for sale (“Securities AFS”), requires recognition of credit losses through an allowance account, but retains the concept from the OTTI model that credit losses are recognized once securities become impaired. For Securities AFS, a decline in fair value due to credit loss results in recognition of an allowance for credit losses. Impairment may result from credit deterioration of the issuer or collateral underlying the security. The assessment of determining if a decline in fair value resulted from a credit loss is performed at the individual security level. Among other factors, the Company considers: 1) the extent to which the fair value is less than the amortized cost basis; 2) the financial condition and near term prospects of the issuer, including consideration of relevant financial metrics or ratios of the issuer; 3) any adverse conditions related to an industry or geographic area of an issuer; 4) any changes to the rating of the security by a rating agency; and 5) any past due principal or interest payments from the issuer. If an assessment of the above factors indicates that a credit loss exists, the Company records an allowance for credit losses for the excess of the amortized cost basis over the present value of cash flows expected to be collected, limited to the amount that the security's fair value is less than its amortized cost basis. Subsequent changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Interest accruals and amortization and accretion of premiums

and discounts are suspended when the credit loss is recognized in earnings. Any interest received after the security has been placed on nonaccrual status is recognized on a cash basis. Accrued interest receivable on Securities AFS is excluded from the estimate of expected credit losses.

The provision for credit losses on the consolidated income statement includes the provisions for credit losses for loans and securities AFS. For the quarter ending March 31, 2020, the provision for credit losses for loans was $2.3 million and the provision for credit losses for securities AFS was $1.8 million, resulting in a total provision for credit losses of $4.1 million.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. ASU 2020-04 provides optional guidance for applying generally accepted accounting principles (“GAAP”) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. The adoption of ASU 2020-04 is not expected to have a significant impact on the Company’s consolidated financial statements.

In November 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes”. ASU 2019-12 provides amendments to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of ASU 2019-12 is not expected to have a significant impact on the Company's consolidated financial statements.

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections. ASU 2019-07 amends certain Securities and Exchange Commission (“SEC”) sections or paragraphs within the Accounting Standards Codification (“ASC”) to reflect changes in SEC Final Rule Releases (“SEC Releases”) No. 33-10532, Disclosure Update and Simplification and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. The effective date and transition requirements for the amendments in this ASU are the same as the effective dates and transition requirements in SEC Releases 33-10532, 33-10231, and 33-10442, as amended by this ASU. The adoption of ASU 2019-07 is not expected to have a significant impact on the Company's consolidated financial statements.

~~In May 2019, the FASB issued ASU 2019-05,~~ ~~Financial Instruments – Credit Losses (Topic 326), Targeted Transition Relief. ASU 2019-05 provides entities that have certain instruments within the scope of~~ ~~Subtopic 326-20, Financial Instruments – Credit Losses Measured at Amortized Cost, with an option to irrevocably elect the fair value option in~~ ~~Subtopic 825-10, Financial Instruments – Overall~~ applied on an instrument-by-instrument basis for eligible instruments, upon adoption of ASU 2019-05. The effective date and transition requirements for the amendments in this ASU are effective for fiscal years beginning after December 15, 2019. The adoption of ASU 2019-05 ~~is not expected to have a significant impact on the Company's consolidated financial statements.~~

~~In April 2019, the FASB issued ASU 2019-04,~~ ~~Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic, 825, Financial Instruments~~. Regarding Topic 326, ASU 2019-04 provides improvements to clarify the guidance in the amendments in ASU 2016-13, or to correct unintended application of guidance. The effective date and transition requirements for the amendments in this ASU are effective for fiscal years beginning after December 15, 2019. We expect the adoption of ASU 2019-04 will impact the Company’s accounting for credit losses in the same manner as the guidance in ASU 2016-13 described below. Regarding ~~Topic 815 and Topic 825, the adoption of ASU 2019-04 is not expected to have a significant impact on the Company’s financial statements.~~

~~In March 2019, the FASB issued ASU 2019-01,~~ ~~Leases (Topic 842), Codification Improvements. ASU 2019-01 provides improvements to clarify ASU 2016-02,~~ ~~Leases (Topic 842), or to correct unintended application of guidance.~~ The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The adoption of ASU 2019-01 is not expected to have a significant impact on the Company's consolidated financial statements.

~~In November 2018, the FASB issued ASU 2018-19,~~ ~~Codification Improvements to Topic 326, Financial Instruments – Credit Losses. ASU 2018-19 provides improvements to clarify the guidance in the amendments in ASU 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 326)~~, or to correct unintended application of guidance. The effective date and transition requirements for the amendments in this ASU are the same as the effective dates and transition requirements in ASU 2016-13, as amended by this ASU.

~~We expect the adoption of ASU 2018-19 will impact the Company’s accounting for credit losses in the same manner as the guidance in ASU 2016-13 described below.~~

~~In August 2018, the FASB issued guidance within ASU 2018-13, Fair Value Measurement (Topic 820),Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement~~. The amendments within ASU 2018-13 remove, modify, and supplement the disclosure requirements for fair value measurements. Disclosure requirements that were removed include: the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additional disclosure requirements include: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. With the exception of the above additional disclosure requirements, which will be applied prospectively, all other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The adoption of ASU 2018-13 is not expected to have a significant impact on the Company's consolidated financial statements.

~~In January 2017, the FASB issued~~ ~~ASU~~ ~~2017-04,~~ ~~Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ which provides updated guidance on how an entity is required to test goodwill for impairment. This update is effective for the Company for annual periods beginning after December 15, 2019, and interim periods within those annual periods. The adoption of ASU 2017-04 is not expected to have a material ~~effect on the Company’s consolidated financial statements~~.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ which introduces new guidance for the accounting for credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new model, referred to as the current expected credit losses (CECL) model, will apply to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. Upon initial recognition of the exposure, the CECL model requires an entity to estimate the credit losses expected over the life of an exposure. This update is effective for the Company for annual periods beginning after December 15, 2019, and interim periods within those annual periods. The Company has begun analyzing the data requirements needed to implement the adoption of ASU 2016-13 and we expect that the adoption of ASU 2016-13 may have a significant impact on the Company’s recording of its allowance for loan losses. The financial statement impact of the implementation of ASU 2016-13 is undeterminable at this time.

On June 1, 2018, the Company completed the acquisition of PBB Bancorp and its wholly owned subsidiary Premier Business Bank (collectively “PBB”), through a merger of PBB with and into the Bank, in exchange for 5,234,593 shares of its common stock with a fair value of $19.39 per share. The primary reason for acquiring PBB was to expand our operations in Southern California.

The acquisition is accounted for under the purchase method of accounting. The acquired assets, assumed liabilities and identifiable intangible assets are recorded at their respective acquisition date fair values. Goodwill of $61 million, which is not tax deductible, is included in intangible assets in the table below.

The following table represents the assets acquired and liabilities assumed of PBB as of June 1, 2018 and the fair value adjustments and amounts recorded by the Bank in 2018 under the acquisition method of accounting:

(dollars in thousands)

PBB Book Value

Fair Value Adjustments

Fair Value
Assets Acquired:

Cash and cash equivalents
$
47,582

$
—

$
47,582

Securities AFS

10,072

(90
)

9,982

Loans, net of deferred fees

537,885

(14,986
)

522,899

Allowance for loan losses

(3,011
)

3,011

—

Premises and equipment, net

3,811

(1,536
)

2,275

Investment in FHLB stock

3,229

—

3,229

Deferred taxes

1,451

2,398

3,849

REO

934

(109
)

825

Goodwill and Core deposit intangible

634

66,615

67,249

Other assets

6,634

(566
)

6,068

Total assets acquired
$
609,221

$
54,737

$
663,958

Liabilities Assumed:

Deposits
$
477,366

$
219

$
477,585

Borrowings

79,911

(341
)

79,570

Accounts payable and other liabilities

5,204

100

5,304

Total liabilities assumed

562,481

(22
)

562,459

Excess of assets acquired over liabilities assumed

46,740

54,759

101,499

Total
$
609,221

$
54,737

$
663,958

Consideration:

Stock issued

$
101,499

In many cases, the fair values of assets acquired and liabilities assumed were determined by estimating the cash flows expected to result from those assets and liabilities and discounting them at appropriate market rates. The most significant category of assets for which this procedure was used was that of acquired loans. The excess of expected cash flows above the fair value of the majority of loans will be accreted to interest income over the remaining lives of the loans in accordance with FASB Accounting Standards Codification (“ASC”) 310-20.

Certain loans, for which specific credit-related deterioration since origination was identified, are recorded at fair value reflecting the present value of the amounts expected to be collected. Income recognition on these “purchased credit impaired” loans is based on a reasonable expectation about the timing and amount of cash flows to be collected. Acquired loans deemed impaired and considered collateral dependent, with the timing of the sale of loan collateral indeterminate, remain on nonaccrual status and have no accretable yield. All purchased credit impaired loans were classified as accruing loans as of and subsequent to the acquisition date.

~~In accordance with generally accepted accounting principles there was no carryover of the allowance for loan losses that had been previously recorded by PBB.~~

The Company recorded a deferred income tax asset of $3.8 million related to PBB’s operating loss carry-forward and other tax attributes of PBB, along with the effects of fair value adjustments resulting from applying the purchase method of accounting.

The fair value of savings and transaction deposit accounts acquired from PBB were assumed to approximate their carrying value as these accounts have no stated maturity and are payable on demand. Certificates of deposit accounts were valued by comparing the contractual cost of the portfolio to an identical portfolio bearing current market rates. The portfolio was segregated into pools based on remaining maturity. For each pool, the projected cash flows from maturing certificates were then calculated based on contractual rates and prevailing market rates. The valuation adjustment for each pool is equal to the present value of the difference of these two cash flows, discounted at the assumed market rate for a certificate with a corresponding maturity. This valuation adjustment will be accreted to reduce interest expense over the remaining maturities of the respective pools. The Company also recorded a core deposit intangible, which represents the value of the deposit relationships acquired from PBB, of $6.7 million. The core deposit intangible will be amortized over a period of 10 years.

The following table presents unaudited pro forma information for the nine month period ending September 30, 2018 as if the acquisition of PBB had occurred on January 1, 2018, after giving effect to certain adjustments. The unaudited pro forma information for this period includes adjustments for interest income on loans acquired, amortization of intangibles arising from the transaction, adjustments for interest expense on deposits acquired, acquisition costs, and the related income tax effects of all these items. The net effect of these pro forma adjustments was an increase of $6.3 million in net income for the nine months ended September 30, 2018. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed date.

The revenues (net interest income and noninterest income) and net income for the period from June 1, 2018 to September 30, 2018 related to the operations acquired from PBB and included in our results of operations for the nine months ended September 30, 2018 were approximately $10.5 million and $7.3 million, respectively.

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Current accounting guidance establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

Securities available for sale and effective with the adoption of ASU 2016-01 on January 1, 2018, investments in equity securities, are measured at fair value on a recurring basis depending upon whether the inputs are Level 1, 2 or 3 as described above.

The following tables show the recorded amounts of assets and liabilities measured at fair value on a recurring basis as of:

			Fair Value Measurement Level								Fair Value Measurement Level
(dollars in thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
September 30, 2019:
Investment securities available for sale:
Agency mortgage-backed securities	$	935,638	$	—	$	935,638	$	—
Beneficial interest – FHLMC securitizations		50,038		—		—		50,038
Corporate bonds		55,827		—		55,827		—
Other		1,437		403		1,034		—
Investment in equity securities		357		357		—		—
Total assets at fair value on a recurring basis	$	1,043,297	$	760	$	992,499	$	50,038


December 31, 2018:
March 31, 2020:
Investment securities available for sale:
Agency mortgage-backed securities	$	721,669	$	—	$	388,527	$	333,142	$	862,811	$	—	$	862,811	$	—
Beneficial interest – FHLMC securitizations		32,086		—		—		32,086		38,415		—		—		38,415
Corporate bonds		54,344		—		54,344		—		58,786		—		58,786		—
Other		1,470		497		973		—		1,465		409		1,056		—
Investment in equity securities		352		352		—		—		293		293		—		—
Total assets at fair value on a recurring basis	$	809,921	$	849	$	443,844	$	365,228	$	961,770	$	702	$	922,653	$	38,415

Derivatives:
Interest rate swaps	$	5,175	$	—	$	5,175	$	—	$	8,333	$	—	$	8,333	$	—

December 31, 2019:
Investment securities available for sale:
Agency mortgage-backed securities									$	914,977	$	—	$	914,977	$	—
Beneficial interest – FHLMC securitizations										42,706		—		—		42,706
Corporate bonds										55,834		—		55,834		—
Other										1,449		403		1,046		—
Investment in equity securities										434		434		—		—
Total assets at fair value on a recurring basis									$	1,015,400	$	837	$	971,857	$	42,706

The decrease in Level 3 assets from December 31, ~~2018~~2019 was due to ~~a change in pricing methodology~~Beneficial interest – FHLMC securitization paydowns.

Due to higher than expected prepayments on an underlying 2016 securitization, especially during the last three quarters, the value of ~~agency mortgage-backed securities. The December 31, 2018 agency mortgage-backed securities Level 2~~an interest only strip security became impaired and ~~Level 3 values have been adjusted~~we were required to ~~reflect a correction to~~reduce the ~~amounts previously reported. The total amount~~value of ~~agency mortgage-backed securities at December 31, 2018 did not change.~~the security by $1.8 million.

From time to time, we may be required to measure other assets at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.

~~Impaired~~ Loans. ~~ASC 820-10 applies~~Loans measured at fair value on a nonrecurring basis include collateral dependent loans held for investment. The specific reserves for these loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Internal discounted cash flow analyses are also utilized to ~~loans measured for impairment in accordance with ASC 310-10,~~ ~~Accounting by Creditors for Impairment of a Loan, at~~estimate the fair value of ~~the loan’s collateral (if the loan is collateral dependent) less estimated selling costs.~~these loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity. When the fair value of the collateral is based on an observable market price or a current appraised value, we measure the impaired loan at nonrecurring Level 2. When an appraised value is not available, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price or a discounted cash flow has been used to determine the fair value, we measure the impaired loan at nonrecurring Level 3. The total collateral dependent impaired Level 3 loans were ~~$25.5~~$18.0 million and ~~$12.8~~$18.9 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. There were 0 specific reserves related to these loans at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

Real Estate Owned. The fair value of real estate owned is based on external appraised values that include adjustments for estimated selling costs and assumptions of market conditions that are not directly observable, resulting in a Level 3 classification. ~~As of September 30, 2019 and December 31, 2018, the fair value of real estate owned was $0 and $0.8 million, respectively.~~

Mortgage Servicing Rights. When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income, resulting in a Level 3 classification. All classes of servicing assets are

subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

FASB ASC ~~825,~~825-10, “Disclosures about Fair Value of Financial Instruments” requires disclosure of the fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate such value. The methodologies for estimating the fair value of financial assets and financial liabilities measured at fair value on a recurring and non-recurring basis are discussed above. The estimated fair value amounts have been determined by management using available market information and appropriate valuation methodologies and are based on the exit price notion set forth by ASU ~~2016-1.~~2016-01. In cases where quoted market prices are not available, fair values are based on estimates using present value or other market value techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. The aggregate fair value amounts presented below do not represent the underlying value of the Company.

Fair value estimates are made at a discrete point in time based on relevant market information and other information about the financial instruments. Because no active market exists for a significant portion of our financial instruments, fair value estimates are based in large part on judgments we make primarily regarding current economic conditions, risk characteristics of various financial instruments, prepayment rates, and future expected loss experience. These estimates are subjective in nature and invariably involve some inherent uncertainties. Additionally, unexpected changes in events or circumstances can occur that could require us to make changes to our assumptions and which, in turn, could significantly affect and require us to make changes to our previous estimates of fair value.

In addition, the fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of existing and anticipated future customer relationships and the value of assets and liabilities that are not considered financial instruments, such as premises and equipment and other real estate owned.

The following methods and assumptions were used to estimate the fair value of financial instruments:

Cash and Cash Equivalents. The fair value of cash and cash equivalents approximates its carrying value.

Interest-Bearing Deposits with Financial Institutions. The fair values of interest-bearing deposits maturing within ninety days approximate their carrying values.

Investment Securities Available for Sale. Investment securities available-for-sale are measured at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. When a market is illiquid or there is a lack of transparency around the inputs to valuation, the securities are classified as Level 3 and reliance is placed upon internally developed models, and management judgment and evaluation for valuation. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include beneficial interests –in FHLMC ~~securitization.~~securitizations. Significant assumptions in the valuation of these Level 3 securities as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 included a prepayment ~~rate of~~rates ranging from 15% to 25% and discount rates ranging from ~~4.0%~~6.6% to 10%.

Federal Home Loan Bank Stock. The Bank is a member of the Federal Home Loan Bank (the “FHLB”). As a member, we are required to own stock of the FHLB, the amount of which is based primarily on the level of our borrowings from this institution. The fair value of the stock is equal to the carrying amount, is classified as restricted securities and is periodically evaluated for impairment based on our assessment of the ultimate recoverability of our investments in that stock. Any cash or stock dividends paid to us on such stock are reported as income.

Loans Held For Sale. The fair value of loans held for sale is determined using secondary market pricing.

Loans ~~Other than Impaired Loans~~Held for Investment. The fair value for loans with variable interest rates is the carrying amount. The fair value of fixed rate loans is derived by calculating the discounted value of future cash flows expected to be received by the various homogeneous categories of ~~loans.~~loans or by reference to secondary market pricing. All loans have been adjusted to reflect changes in credit risk.

Deposits. The fair value of demand deposits, savings deposits, and money market deposits is defined as the amounts payable on demand. The fair value of fixed maturity certificates of deposit is estimated based on the discounted value of the future cash flows expected to be paid on the deposits.

Borrowings. The fair value of borrowings is the carrying value of overnight FHLB advances that approximate fair value because of the short-term maturity of this instrument, resulting in a Level 2 classification. The fair value of term borrowings is derived by calculating the discounted value of future cash flows expected to be paid out by the Company.

Interest rate swaps. Interest rate swaps are reported at an estimated fair value utilizing Level 2 inputs including LIBOR rates from overnight to one year and U.S. swap rates from one year to thirty years.

The carrying amounts and estimated fair values of financial instruments are as follows as of:

	Carrying		Fair Value Measurement Level								Carrying		Fair Value Measurement Level
(dollars in thousands)	Value		1		2		3		Total		Value		1		2		3		Total
September 30, 2019:
March 31, 2020:
Assets:
Cash and cash equivalents	$	268,446	$	268,446	$	—	$	—	$	268,446	$	40,359	$	40,359	$	—	$	—	$	40,359
Securities AFS		1,042,940		403		992,499		50,038		1,042,940		961,477		409		922,653		38,415		961,477
Loans held for sale		501,860		—		505,517		—		505,517		520,721		—		526,082		—		526,082
Loans, net		4,353,708		—		—		4,398,500		4,398,500		4,782,513		—		—		4,831,887		4,831,887
Investment in FHLB stock		17,250		—		17,250		—		17,250		21,168		—		21,168		—		21,168
Investment in equity securities		357		357		—		—		357		293		293		—		—		293

Liabilities:
Deposits		5,170,566		3,199,348		1,971,767		—		5,171,115	$	5,030,827	$	3,080,232	$	1,950,121	$	—	$	5,030,353
Borrowings		520,000		—		500,000		20,000		520,000		794,000		—		784,000		10,000		794,000
Interest rate swaps		—		—		—		—		—		8,333		—		8,333		—		8,333

December 31, 2018:
December 31, 2019:
Assets:
Cash and cash equivalents	$	67,312	$	67,312	$	—	$	—	$	67,312	$	65,387	$	65,387	$	—	$	—	$	65,387
Securities AFS		809,569		497		443,844		365,228		809,569		1,014,966		403		971,857		42,706		1,014,966
Loans held for sale		507,643		—		517,273		—		517,273		503,036		—		506,750		—		506,750
Loans, net		4,274,669		—		—		4,408,788		4,408,788		4,526,833		—		—		4,573,516		4,573,516
Investment in FHLB stock		20,307		—		20,307		—		20,307		21,519		—		21,519		—		21,519
Investment in equity securities		352		352		—		—		352		434		434		—		—		434

Liabilities:
Deposits		4,532,968		2,582,758		1,943,635		—		4,526,393	$	4,891,144	$	2,913,493	$	1,977,652	$	—	$	4,891,145
Borrowings		708,000		—		703,000		5,000		708,000		743,000		—		733,000		10,000		743,000
Interest rate swaps		5,175		—		5,175		—		5,175

The following table provides a summary of the Company’s securities AFS portfolio as of:

		Amortized	Gross Unrealized					Estimated			Amortized	Gross Unrealized					Estimated
(dollars in thousands)		Cost	Gains		Losses			Fair Value			Cost	Gains		Losses			Fair Value
September 30, 2019:
March 31, 2020:
Agency mortgage-backed securities	$	925,132	$	10,715	$	(209	)	$	935,638	$	855,835	$	17,589	$	(10,613	)	$	862,811
Beneficial interests in FHLMC securitization		50,983		1,808		(2,753	)		50,038		40,433		878		(2,896	)		38,415
Corporate bonds		54,000		1,827		—			55,827		57,000		1,921		(135	)		58,786
Other		1,380		57		—			1,437		1,392		73		—			1,465
Total	$	1,031,495	$	14,407	$	(2,962	)	$	1,042,940	$	954,660	$	20,461	$	(13,644	)	$	961,477

December 31, 2018:
December 31, 2019:
Agency mortgage-backed securities	$	723,597	$	11,883	$	(13,811	)	$	721,669	$	905,949	$	9,174	$	(146	)	$	914,977
Beneficial interests in FHLMC securitization		32,143		1,756		(1,813	)		32,086		47,586		1,801		(6,681	)		42,706
Corporate bonds		54,000		638		(294	)		54,344		54,000		1,834		—			55,834
Other		1,458		15		(3	)		1,470		1,386		63		—			1,449
Total	$	811,198	$	14,292	$	(15,921	)	$	809,569	$	1,008,921	$	12,872	$	(6,827	)	$	1,014,966

US Treasury securities of $0.4 million as of ~~September 30, 2019~~March 31, 2020 that are included in the table above as Other are pledged as collateral to the State of California to meet regulatory requirements related to the Bank’s trust operations. As of ~~September 30, 2019, $151~~March 31, 2020, $74 million of agency mortgage-backed securities are pledged as collateral as support for the Bank’s obligations under loan sales and securitization agreements entered into in 2019 and 2018.

The tables below indicate, as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the gross unrealized losses and fair values of our investments, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Securities with Unrealized Loss at September 30, 2019															Securities with Unrealized Loss at March 31, 2020
	Less than 12 months					12 months or more					Total					Less than 12 months					12 months or more					Total
(dollars in thousands)	Fair Value			Unrealized Loss		Fair Value			Unrealized Loss		Fair Value		Unrealized Loss			Fair Value			Unrealized Loss		Fair Value			Unrealized Loss		Fair Value		Unrealized Loss
Agency mortgage-backed securities	$	5,756	$	(25	)	$	21,940	$	(184	)	$	27,696	$	(209	)	$	501,901	$	(10,613	)	$	—	$	—		$	501,901	$	(10,613	)
Beneficial interests in FHLMC securitization		369		(11	)		4,694		(2,742	)		5,063		(2,753	)		18,667		(2,607	)		503		(289	)		19,170		(2,896	)
Corporate bonds		—		—			—		—			—		—			14,865		(135	)		—		—			14,865		(135	)
Other		—		—			—		—			—		—			—		—			—		—			—		—
Total temporarily impaired securities	$	6,125		(36	)	$	26,634	$	(2,926	)	$	32,759	$	(2,962	)	$	535,433		(13,355	)	$	503	$	(289	)	$	535,936	$	(13,644	)

	Securities with Unrealized Loss at December 31, 2018															Securities with Unrealized Loss at December 31, 2019
	Less than 12 months					12 months or more					Total					Less than 12 months					12 months or more					Total
(dollars in thousands)	Fair Value			Unrealized Loss		Fair Value			Unrealized Loss		Fair Value		Unrealized Loss			Fair Value			Unrealized Loss		Fair Value			Unrealized Loss		Fair Value		Unrealized Loss
Agency mortgage-backed securities	$	—	$	—		$	387,151	$	(13,811	)	$	387,151	$	(13,811	)	$	5,488	$	(2	)	$	13,880	$	(144	)	$	19,368	$	(146	)
Beneficial interests in FHLMC securitization		429		(11	)		7,038		(1,802	)		7,467		(1,813	)		20,609		(2,856	)		3,220		(3,825	)		23,829		(6,681	)
Corporate bonds		38,706		(294	)		—		—			38,706		(294	)
Other		—		—			497		(3	)		497		(3	)
Total temporarily impaired securities	$	39,135		(305	)	$	394,686	$	(15,616	)	$	433,821	$	(15,921	)	$	26,097	$	(2,858	)	$	17,100	$	(3,969	)	$	43,197	$	(6,827	)

Unrealized losses in agency mortgage-backed securities, beneficial interests in FHLMC securitizations, and other securities have not been recognized into income because the issuer bonds are of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in discount rates and assumptions regarding future interest rates. The fair value is expected to recover as the bonds approach maturity. The assessment of determining if a decline in fair value resulted from a credit loss is performed at the individual security level. Among other factors considered are: 1) the extent to which the fair value is less than the amortized cost basis; 2) the financial condition and near term prospects of the issuer, including consideration of relevant financial metrics or ratios of the issuer; 3) any adverse conditions related to an industry or geographic area of an issuer; 4) any changes to the rating of the security by a

For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2020 – UNAUDITED

rating agency; and 5) any past due principal or interest payments from the issuer. If an assessment of the above factors indicates that a credit loss exists, the Company records an allowance for credit losses for the excess of the amortized cost basis over the present value of cash flows expected to be collected, limited to the amount that the security's fair value is less than its amortized cost basis. Subsequent changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized in earnings. Any interest received after the security has been placed on nonaccrual status is recognized on a cash basis.

Due to higher than expected prepayments on an underlying 2016 securitization, especially during the last three quarters, the value of an interest only strip security became impaired and we were required to reduce the value of the security by $1.8 million. The impairment was included as a charge in provision for credit losses on the consolidated income statement.

The scheduled maturities of securities AFS and the related weighted average yields were as follows for the periods indicated:

(dollars in thousands)	Less than 1 Year			1 Through 5 years			5 Through 10 Years			After 10 Years			Total			Less than 1 Year			1 Through 5 years			5 Through 10 Years			After 10 Years			Total
September 30, 2019
March 31, 2020
Amortized Cost:
Corporate bonds	$	—		$	—		$	54,000		$	—		$	54,000		$	—		$	—		$	57,000		$	—		$	57,000
Other		—			400			979			—			1,379			—			400			992			—			1,392
Total		—			400			54,979			—			55,379			—			400			57,992			—			58,392
Weighted average yield	$	—	%		2.21	%		5.29	%		—	%		5.27	%		—	%		2.26	%		5.35	%		—	%		5.33	%
Estimated Fair Value:
Corporate bonds	$	—		$	—		$	55,827		$	—		$	55,827		$	—		$	—		$	58,786		$	—		$	58,786
Other		—			403			1,032			—			1,435			—			409			1,056			—			1,465
Total	$	—		$	403		$	56,859		$	—		$	57,262		$	—		$	409		$	59,842		$	—		$	60,251

(dollars in thousands)	Less than 1 Year			1 Through 5 years			5 Through 10 Years			After 10 Years			Total			Less than 1 Year			1 Through 5 years			5 Through 10 Years			After 10 Years			Total
December 31, 2018
December 31, 2019
Amortized Cost:
Corporate bonds	$	—		$	—		$	54,000		$	—		$	54,000		$	—		$	—		$	54,000		$	—		$	54,000
Other		500			—			958			—			1,458			—			400			986			—			1,386
Total		500			—			54,958			—			55,458		$	—		$	400		$	54,986		$	—		$	55,386
Weighted average yield		1.03	%		—	%		5.29	%		—	%		5.25	%		—	%		2.25	%		5.29	%		—	%		5.27	%
Estimated Fair Value:
Corporate bonds	$	—		$	—		$	54,344		$	—		$	54,344		$	—		$	—		$	55,834		$	—		$	55,834
Other		497			—			973			—			1,470			—			403			1,046			—			1,449
Total	$	497		$	—		$	55,317		$	—		$	55,814		$	—		$	403		$	56,880		$	—		$	57,283

Agency mortgage-backed securities and beneficial interests in FHLMC securitizations are excluded from the above table because such securities are not due at a single maturity date. The weighted average yield of the agency mortgage-backed securities and beneficial interests as of ~~September 30, 2019~~March 31, 2020 was ~~2.87%~~2.37%.

(dollars in thousands)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Outstanding principal balance:
Loans secured by real estate:
Residential properties:
Multifamily	$	1,941,624	$	1,956,935	$	2,369,081	$	2,143,919
Single family		896,607		904,828		851,443		871,181
Total real estate loans secured by residential properties		2,838,231		2,861,763		3,220,524		3,015,100
Commercial properties		871,225		869,169		793,182		834,042
Land		71,110		80,187		68,101		70,257
Total real estate loans		3,780,566		3,811,119		4,081,807		3,919,399
Commercial and industrial loans		566,390		449,805		696,596		600,213
Consumer loans		16,505		22,699		17,476		16,273
Total loans		4,363,461		4,283,623		4,795,879		4,535,885
Premiums, discounts and deferred fees and expenses		10,747		10,046		9,634		11,748
Total	$	4,374,208	$	4,293,669	$	4,805,513	$	4,547,633

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

As of ~~September 30, 2019 and~~ December 31, ~~2018,~~2019, the principal ~~balances~~balance shown above ~~are~~is net of unaccreted discount related to loans acquired in acquisitions of ~~$9.1 million and $13.3 million, respectively.~~$8.4 million.

In 2017 and 2018 the Company purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of these purchased credit impaired loans is as follows as of:

(dollars in thousands)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Outstanding principal balance:
Loans secured by real estate:
Residential properties	$	367		$	451		$	364		$	366
Commercial properties		6,173			10,871			5,544			6,146
Land		1,066			1,089			—			1,058
Total real estate loans		7,606			12,411			5,908			7,570
Commercial and industrial loans		966			1,150			328			603
Consumer loans		7			10
Total loans		8,579			13,571			6,236			8,173
Unaccreted discount on purchased credit impaired loans		(3,788	)		(6,490	)		(3,129	)		(3,657	)
Total	$	4,791		$	7,081		$	3,107		$	4,516

Accretable yield, or income expected to be collected on purchased credit impaired loans, and the related changes, is as follows for the periods indicated:

(dollars in thousands)	Nine Months Ended September 30, 2019			Year Ended December 31, 2018			Three Months Ended March 31, 2020			Year Ended December 31, 2019

Beginning balance	$	767		$	850		$	402		$	767
Accretion of income		(244	)		(1,509	)		(28	)		(311	)
Reclassification from nonaccretable difference		10			—			(300	)		10
Acquisition		—			1,887
Disposals		(57	)		(461	)		—			(64	)
Ending balance	$	476		$	767		$	74		$	402

		Past Due and Still Accruing												Total Past
(dollars in thousands)		30–59 Days			60-89 Days			90 Days or More			Nonaccrual			Due and Nonaccrual			Current		Total
March 31, 2020:
Real estate loans:
Residential properties		$	—		$	—		$	—		$	1,704		$	1,704		$	3,226,037	$	3,227,741
Commercial properties			—			—			399			2,355			2,754			790,561		793,315
Land			500			—			—			—			500			67,525		68,025
Commercial and industrial loans			1,023			233			—			5,173			6,429			692,441		698,870
Consumer loans			2			—			—			18			20			17,542		17,562
Total		$	1,525		$	233		$	399		$	9,250		$	11,407		$	4,794,106	$	4,805,513

Percentage of total loans			0.03	%		0.00	%		0.01	%		0.19	%		0.24	%

December 31, 2019:
Real estate loans:
Residential properties		$	89		$	13		$	—		$	1,743		$	1,845		$	3,013,255	$	3,015,100
Commercial properties			7,586			—			403			2,410			10,399			823,643		834,042
Land			—			—			—			—			—			70,257		70,257
Commercial and industrial loans			695			2,007			—			8,714			11,416			588,797		600,213
Consumer loans	��		22			3			—			—			25			16,248		16,273
Total		$	8,392		$	2,023		$	403		$	12,867		$	23,685		$	4,512,200	$	4,535,885

Percentage of total loans			0.19	%		0.04	%		0.01	%		0.28	%		0.52	%

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

Past Due and Still Accruing

Total Past

(dollars in thousands)

30–59 Days

60-89 Days

90 Days
or More

Nonaccrual

Due and
Nonaccrual

Current

Total

September 30, 2019:

Real estate loans:

Residential properties

$
14

$
—

$
—

$
1,452

$
1,466

$
2,836,765

$
2,838,231

Commercial properties

—

1,089

—

7,575

8,664

862,561

871,225

Land

3,262

—

—

697

3,959

67,151

71,110

Commercial and industrial loans

3,937

87

106

11,478

15,608

550,782

566,390

Consumer loans

—

—

—

—

—

16,505

16,505

Total

$
7,213

$
1,176

$
106

$
21,202

$
29,697

$
4,333,764

$
4,363,461

Percentage of total loans

0.17
%

0.03
%

—
%

0.49
%

0.68
%

December 31, 2018:

Real estate loans:

Residential properties

$
74

$
—

$
499

$
651

$
1,224

$
2,860,539


$
2,861,763

Commercial properties

440

117

—

1,607

2,164

867,005



869,169

Land

2,000

—

—

697

2,697

77,490



80,187

Commercial and industrial loans

12,541

300

536

8,559

21,936

427,869



449,805

Consumer loans

—

7

—

2

9

22,690



22,699

Total

$
15,055

$
424

$
1,035

$
11,516

$
28,030

$
4,255,593


$
4,283,623

Percentage of total loans

0.35
%

0.01
%

0.02
%

0.27
%

0.65
%

The following table presents the loans classified as troubled debt restructurings (“TDR”) by accrual and nonaccrual status as of:

	September 30, 2019							December 31, 2018					March 31, 2020							December 31, 2019
(dollars in thousands)	Accrual			Nonaccrual	Total			Accrual	Nonaccrual		Total		Accrual			Nonaccrual	Total			Accrual	Nonaccrual		Total
Residential loans													$	1,200	$	—	$	1,200	$	1,200	$	—	$	1,200
Commercial real estate loans	$	1,207	$	2,206	$	3,413	$	1,264	$	1,491	$	2,755		1,168		1,405		2,573		1,188		2,166		3,354
Commercial and industrial loans		—		2,883		2,883		—		2,096		2,096		618		3,531		4,149		557		2,972		3,529
Total	$	1,207	$	5,089		6,296	$	1,264	$	3,587	$	4,851	$	2,986	$	4,936	$	7,922	$	2,945	$	5,138	$	8,083

The following table provides information on loans that were modified as TDRs for the following periods:


		Outstanding Recorded Investment							Outstanding Recorded Investment
(dollars in thousands)	Number of loans	Pre-Modification		Post-Modification		Financial Impact		Number of loans	Pre-Modification		Post-Modification		Financial Impact
Year Ended December 31, 2018:
Year Ended December 31, 2019:
Residential loans								1	$	1,200	$	1,200	$	—
Commercial real estate loans	1	$	1,264	$	1,264	$	—	1		2,872		2,872		—
Commercial and industrial loans	3		2,096		2,096		—	7		1,754		1,754		—
Total	4	$	3,360	$	3,360	$	—	9	$	5,826	$	5,826	$	—

All of these loans were classified as a TDR as a result of a reduction in required principal payments and an extension of the maturity date of the loans. These loans have been paying in accordance with the terms of their restructure.

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

The following is a roll forward of the Bank’s allowance for ~~loan~~credit losses for the ~~following periods:~~quarters ended March 31:

(dollars in thousands)	Beginning Balance		Provision for Loan Losses			Charge-offs			Recoveries		Ending Balance		Beginning Balance		Provision for Credit Losses			Charge-offs			Recoveries		Ending Balance
Quarter Ended September 30, 2019:
2020:
Real estate loans:
Residential properties	$	8,702	$	(575	)	$	—		$	—	$	8,127	$	8,423	$	(2,034	)	$	—		$	—	$	6,389
Commercial properties		4,560		5			—			—		4,565		4,166		772			—			—		4,938
Land		471		102			—			—		573		573		771			—			—		1,344
Commercial and industrial loans		6,261		648			(1,279	)		1,407		7,037		7,448		2,756			(530	)		451		10,125
Consumer loans		206		(8	)		—			—		198		190		14			—			—		204
Total	$	20,200	$	172		$	(1,279	)	$	1,407	$	20,500	$	20,800	$	2,279		$	(530	)	$	451	$	23,000

Nine Months Ended September 30, 2019:
2019:
Real estate loans:
Residential properties	$	9,216	$	(1,089	)	$	—		$	—	$	8,127	$	9,216	$	422		$	—		$	—	$	9,638
Commercial properties		4,547		18			—			—		4,565		4,547		(232	)		—			—		4,315
Land		391		182			—			—		573		391		(149	)		—			—		242
Commercial and industrial loans		4,628		2,848			(2,208	)		1,769		7,037		4,628		503			(543	)		207		4,795
Consumer loans		218		(16	)		(5	)		1		198		218		(4	)		(5	)		1		210
Total	$	19,000	$	1,943		$	(2,213	)	$	1,770	$	20,500	$	19,000	$	540		$	(548	)	$	208	$	19,200

Year Ended December 31, 2018:
Real estate loans:
Residential properties	$	9,715	$	(499	)	$	—		$	—	$	9,216
Commercial properties		4,399		359			(211	)		—		4,547
Land		395		(4	)		—			—		391
Commercial and industrial loans		3,624		4,413			(3,978	)		569		4,628
Consumer loans		267		(49	)		—			—		218
Total	$	18,400	$	4,220		$	(4,189	)	$	569	$	19,000

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

The following table presents the balance in the allowance for ~~loan~~credit losses and the recorded investment in loans by impairment method as of:

	Allowance for Loan Losses								Unaccreted Credit		Allowance for Credit Losses								Unaccreted Credit
	Evaluated for Impairment				Purchased				Component		Evaluated for Impairment				Purchased				Component
(dollars in thousands)	Individually		Collectively		Impaired		Total		Other Loans		Individually		Collectively		Impaired		Total		Other Loans
September 30, 2019:
Allowance for loan losses:
March 31, 2020:
Allowance for credit losses:
Real estate loans:
Residential properties	$	—	$	8,127	$	—	$	8,127	$	1,167	$	—	$	6,389	$	—	$	6,389
Commercial properties		111		4,454		—		4,565		1,277		—		4,938		—		4,938
Land		—		573		—		573		25		—		1,344		—		1,344
Commercial and industrial loans		282		6,755		—		7,037		326		1,189		8,936		—		10,125
Consumer loans		—		198		—		198		1		19		185		—		204
Total	$	393	$	20,107	$	—	$	20,500	$	2,796	$	1,208	$	21,792	$	—	$	23,000
Loans:
Real estate loans:
Residential properties	$	1,426	$	2,836,805	$	—	$	2,838,231	$	200,542	$	2,909	$	3,224,832	$	—	$	3,227,741
Commercial properties		12,688		855,157		3,380		871,225		235,633		7,315		783,129		2,871		793,315
Land		697		69,625		788		71,110		34,562		—		68,025		—		68,025
Commercial and industrial loans		10,722		555,045		623		566,390		29,060		7,715		690,919		236		698,870
Consumer loans		—		16,505		—		16,505		285		18		17,544		—		17,562
Total	$	25,533	$	4,333,137	$	4,791	$	4,363,461	$	500,082	$	17,957	$	4,784,449	$	3,107	$	4,805,513

December 31, 2018:
Allowance for loan losses:
December 31, 2019:
Allowance for credit losses:
Real estate loans:
Residential properties	$	—	$	9,216	$	—	$	9,216	$	1,724	$	—	$	8,423	$	—	$	8,423	$	1,013
Commercial properties		126		4,421		—		4,547		1,779		107		4,059		—		4,166		1,048
Land		—		391		—		391		84		—		573		—		573		6
Commercial and industrial loans		290		4,338		—		4,628		633		763		6,685		—		7,448		277
Consumer loans		—		218		—		218		3		—		190		—		190		1
Total	$	416	$	18,584	$	—	$	19,000	$	4,223	$	870	$	19,930	$	—	$	20,800	$	2,345
Loans:
Real estate loans:
Residential properties	$	651	$	2,861,112	$	—	$	2,861,763	$	241,698	$	2,897	$	3,012,203	$	—	$	3,015,100	$	189,339
Commercial properties		2,871		860,835		5,463		869,169		275,516		6,689		824,026		3,327		834,042		201,370
Land		697		78,681		809		80,187		41,132		—		69,476		781		70,257		28,660
Commercial and industrial loans		8,559		440,437		809		449,805		61,183		9,316		590,489		408		600,213		24,143
Consumer loans		—		22,699		—		22,699		366		—		16,273		—		16,273		253
Total	$	12,778	$	4,263,764	$	7,081	$	4,283,623	$	619,895	$	18,902	$	4,512,467	$	4,516	$	4,535,885	$	443,765

The column labeled “Unaccreted Credit Component Other Loans” represents the amount of unaccreted credit component discount for the other loans acquired in a business combination, and the stated principal balance of the related loans. The discount is equal to ~~0.56% and 0.68%~~0.53% of the stated principal balance of these loans as of ~~September 30, 2019 and~~ December 31, ~~2018, respectively.~~2019. In addition to this unaccreted credit component discount, an additional ~~$0.4~~$0.3 million of ~~ALLL~~ACL has been provided for these loans as of ~~September 30, 2019 and~~ December 31, ~~2018.~~2019.

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as loans secured by multifamily or commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. The Bank uses the following definitions for risk ratings:

Pass: Loans classified as pass are strong credits with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

~~Impaired:~~ ~~A loan is considered impaired, when, based on current information and events, it is probable that the Bank will be unable~~ PCD (PCI prior to ~~collect all amounts due according to the contractual terms of the loan agreement.~~

~~Additionally, all loans classified as TDRs are considered impaired at the time they are restructured. Purchased credit impaired~~January 1, 2020) loans are ~~not considered impaired~~classified s substandard loans.

Loans individually evaluated: Substandard loans and other TDR loans are individually evaluated for ~~these purposes.~~credit losses and are broken out separately in the table below.

Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions above and smaller, homogeneous loans not assessed on an individual basis.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows as of:

(dollars in thousands)	Pass		Special Mention		Substandard		Impaired		Total		Pass		Special Mention		Substandard Loans		Loans Individually Evaluated		Total
September 30, 2019:
March 31, 2020:
Real estate loans:
Residential properties	$	2,835,650	$	1,155	$	—	$	1,426	$	2,838,231	$	3,224,832	$	—	$	—	$	2,909	$	3,227,741
Commercial properties		851,578		688		7,066		11,893		871,225		781,902		1,227		2,871		7,315		793,315
Land		69,625		—		788		697		71,110		68,025		—		—		—		68,025
Commercial and industrial loans		547,235		689		6,949		11,517		566,390		683,273		7,646		236		7,715		698,870
Consumer loans		16,505		—		—		—		16,505		17,544		—		—		18		17,562
Total	$	4,320,593	$	2,532	$	14,803	$	25,533	$	4,363,461	$	4,775,576	$	8,873	$	3,107	$	17,957	$	4,805,513

December 31, 2018:
December 31, 2019:
Real estate loans:
Residential properties	$	2,857,666	$	3,446	$	—	$	651	$	2,861,763	$	3,012,203	$	—	$	—	$	2,897	$	3,015,100
Commercial properties		845,672		13,024		7,602		2,871		869,169		821,425		679		5,249		6,689		834,042
Land		78,681		—		809		697		80,187		69,476		—		781		—		70,257
Commercial and industrial loans		431,751		7,723		1,772		8,559		449,805		579,153		8,202		3,542		9,316		600,213
Consumer loans		22,699		—		—		—		22,699		16,273		—		—		—		16,273
Total	$	4,236,469	$	24,193	$	10,183	$	12,778	$	4,283,623	$	4,498,530	$	8,881	$	9,572	$	18,902	$	4,535,885

The risk categories of loans based on year of origination, with classified loans defined as special mention loans, substandard loans and loans individually evaluated as of March 31, 2020, are as follows:

(dollars in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Loans secured by Real Estate:
Residential
Multifamily
Pass	$	437,964	$	697,119	$	611,435	$	377,833	$	161,356	$	89,830	$	—	$	2,375,537
Classified		—		—		—		—		—		—		—		—
Total	$	437,964	$	697,119	$	611,435	$	377,833	$	161,356	$	89,830	$	—	$	2,375,537

Single Family
Pass	$	23,415	$	113,706	$	159,875	$	137,909	$	143,315	$	241,893	$	29,182	$	849,295
Classified		—		—		—		1,998		—		611		300		2,909
Total	$	23,415	$	113,706	$	159,875	$	139,907	$	143,315	$	242,504	$	29,482	$	852,204

Commercial Real Estate
Pass	$	6,069	$	109,467	$	145,796	$	141,447	$	133,583	$	246,708	$	—	$	783,070
Classified		—		44		—		1,716		1,300		7,184		—		10,244
Total	$	6,069	$	109,511	$	145,796	$	143,163	$	134,883	$	253,892	$	—	$	793,314

Land and Constructions
Pass	$	—	$	13,618	$	22,605	$	29,946	$	794	$	1,062	$	—	$	68,025
Classified		—		—		—		—		—		—		—		—
Total	$		$	13,618	$	22,605	$	29,946	$	794	$	1,062	$	—	$	68,025

Commercial
Pass	$	80,076	$	195,489	$	89,205	$	25,538	$	17,905	$	22,409	$	252,711	$	683,333
Classified		76		3,886		813		475		4,906		276		5,105		15,537
Total	$	80,152	$	199,375	$	90,018	$	26,013	$	22,811	$	22,685	$	257,816	$	698,870

Consumer
Pass	$	1,514	$	—	$	1,465	$	5	$	7,194	$	146	$	7,220	$	17,544
Classified		—		—		—		18		—		—		—		18
Total	$	1,514	$	—	$	1,465	$	23	$	7,194	$	146	$	7,220	$	17,562

Total loans
Pass	$	549,038	$	1,129,399	$	1,030,381	$	712,678	$	464,147	$	602,048	$	289,113	$	4,776,804
Classified		76		3,930		831		4,189		6,207		8,071		5,405		28,709
Total	$	549,114	$	1,133,329	$	1,031,212	$	716,867	$	470,354	$	610,119	$	294,518	$	4,805,513

	With No Allowance Recorded				With an Allowance Recorded
(dollars in thousands)	Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance		Recorded Investment		Related Allowance
March 31, 2020:
Real estate loans:
Residential properties	$	1,200	$	1,200	$	1,785	$	1,710	$	—
Commercial properties		4,963		4,955		2,622		2,359		—
Land		—		—		—		—		—
Commercial and industrial loans		2,470		2,489		5,791		5,226		1,189
Consumer loans		—		—		19		18		19
Total	$	8,633	$	8,644	$	10,217	$	9,313	$	1,208

December 31, 2019:
Real estate loans:
Residential properties	$	2,970	$	2,897	$	—	$	—	$	—
Commercial properties		5,683		5,456		1,188		1,188		107
Land		—		—		—		—		—
Commercial and industrial loans		6,485		5,708		3,764		3,653		763
Total	$	15,138	$	14,061	$	4,952	$	4,841	$	870

The weighted average annualized average balance of the recorded investment for these loans, beginning from when the loan became classified as a loan individually evaluated, and any interest income recorded on these loans after they became classified as a loan individually evaluated is as follows for the:

There was 0 interest income recognized on a cash basis in either 2020 or 2019 on these loans.

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses and the related ACL allocated to these loans:

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

~~Impaired loans evaluated individually and any related allowance are as follows as of:~~

With No Allowance Recorded

With an Allowance Recorded

(dollars in thousands)

Unpaid Principal Balance

Recorded Investment

Unpaid Principal Balance

Recorded Investment

Related Allowance

September 30, 2019:

Real estate loans:

Residential properties

$
1,479

$
1,426

$
—

$
—

$
—

Commercial properties

11,675

11,481

1,207

1,207

111

Land

697

697

—

—

—

Commercial and industrial loans

9,429

8,717

2,084

2,005

282

Total

$
23,280

$
22,321

$
3,291

$
3,212

$
393

December 31, 2018:

Real estate loans:

Residential properties

$
651

$
651

$
—

$
—

$
—

Commercial properties

1,607

1,607

1,264

1,264

126

Land

697

697

—

—

—

Commercial and industrial loans

6,543

6,543

2,016

2,016

290

Total

$
9,498

$
9,498

$
3,280

$
3,280

$
416

The weighted average annualized average balance of the recorded investment for impaired loans, beginning from when the loan became impaired, and any interest income recorded on impaired loans after they became impaired is as follows for the:

~~There was 0 interest income recognized on a cash basis in either 2019 or 2018 on impaired loans.~~

~~During the first nine months of~~In 2019, FFB recognized a $4.2 million ~~gain~~of gains on the sale of ~~$551~~$549 million of multifamily ~~loans and recorded mortgage servicing rights of $1.9 million on the sale of those~~ loans. During the first nine months of 2018, FFB recognized a $0.4 million gain on the sale of $674 million of multifamily loans and recorded mortgage servicing rights of $2.6 million on the sale of those loans. During the second quarter of 2018, we recorded a $1.5 million charge related to swap agreements put in place in anticipation of a loan sale, which occurred in the third quarter of 2018.

We entered into 2 swap agreements in the fourth quarter of 2018 to reduce the interest rate risk of our portfolio of loans held for sale. These swaps were closed out in September 2019 in conjunction with the loan sale at a cost of $19.9 million, resulting in a lower gain on sale.

For sales of multifamily loans, FFB retained servicing rights for the majority of these loans and recognized mortgage servicing rights as part of the transactions. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, mortgage servicing rights were ~~$7.4~~$6.6 million and ~~$6.4~~$7 million, respectively and the amount of loans serviced for others totaled ~~$1.8~~$1.4 billion at ~~September 30, 2019~~March 31, 2020 and ~~$1.3~~$1.7 billion at December 31, ~~2018.~~2019. Servicing fees for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, and in ~~2018~~2019 were ~~$1.2~~$0.4 million and ~~$1.1~~$1.7 million, respectively.

The following table summarizes the outstanding balance of deposits and average rates paid thereon as of:

	September 30, 2019					December 31, 2018					March 31, 2020					December 31, 2019
(dollars in thousands)	Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate
Demand deposits:
Noninterest-bearing	$	1,532,105		—		$	1,074,661		—		$	1,315,114		—		$	1,192,481		—
Interest-bearing		350,344		0.670	%		317,380		0.798	%		384,215		0.436	%		386,276		0.635	%
Money market and savings		1,316,899		1.367	%		1,190,717		1.115	%		1,380,903		0.849	%		1,334,736		1.355	%
Certificates of deposits		1,971,218		2.221	%		1,950,210		2.142	%		1,950,595		1.732	%		1,977,651		1.971	%
Total	$	5,170,566		1.240	%	$	4,532,968		1.270	%	$	5,030,827		0.938	%	$	4,891,144		1.217	%

At ~~September 30, 2019,~~March 31, 2020, of the ~~$461~~$559 million of certificates of deposits of $250,000 or more, ~~$459~~$557 million mature within one year and $2 million mature after one year. Of the $1.4 billion of certificates of deposit of less than $250,000, $1.4 billion mature within one year and $12 million mature after one year. At December 31, 2019, of the $472 million of certificates of deposits of $250,000 or more, $471 million mature within one year and $0.8 million mature after one year. Of the $1.5 billion of certificates of deposit of less than $250,000, $1.5 billion mature within one year and $11 million mature after one year. At December 31, 2018, of the $360 million of certificates of deposits of $250,000 or more, $332 million mature within one year and $28 million mature after one year. Of the $1.6 billion of certificates of deposit of less than $250,000, $1.5 billion mature within one year and $53$13 million mature after one year.

At ~~September 30,~~March 31, 2020, our borrowings consisted of $34 million of overnight FHLB advances at the Bank, $750 million in FHLB term advances at the Bank and $10 million of borrowings under a holding company line of credit. At December 31, 2019, our borrowings consisted of $233 million of overnight FHLB advances at the Bank, a $500 million FHLB term advance at the Bank, and ~~$20~~$10 million of borrowings ~~outstanding on a holding company line of credit. At December 31, 2018, our borrowings consisted of $703 million of overnight FHLB advances at the Bank and $5 million of borrowings outstanding on~~under a holding company line of credit. The $500 million and $250 million FHLB ~~advance~~term advances outstanding at ~~September 30, 2019 matures~~March 31, 2020 mature in September 2020 and ~~bears an~~March 2021, respectively, and bear interest ~~rate~~rates of 1.77%. and 0.47%, respectively. The overnight FHLB ~~advance and other borrowings outstanding at December 31, 2018~~advances were paid in full in the early part of April 2020 and January ~~2019,~~2020, respectively, and bore an interest ~~rate~~rates of ~~2.56%.~~0.21% and 1.66%, respectively. At ~~September 30, 2019,~~March 31, 2020, the interest rate on the holding company line of credit was ~~5.82%~~5.41%.

FHLB advances are collateralized primarily by loans secured by multifamily and commercial real estate properties with a carrying value of ~~$3.7~~$3.6 billion as of ~~September 30, 2019.~~March 31, 2020. As a matter of practice, the Bank provides substantially all of its qualifying loans as collateral to the FHLB. The Bank’s total borrowing capacity from the FHLB at ~~September 30, 2019~~March 31, 2020 was ~~$2.5~~$1.6 billion. In addition to the ~~$500~~$784 million borrowing at ~~September 30, 2019,~~March 31, 2020, the Bank had in place ~~$231~~$281 million of letters of credit from the FHLB which are used to meet collateral requirements for borrowings from the State of California and local agencies.

During 2017, FFI ~~has~~ entered into a loan agreement with an unaffiliated lender that provides for a revolving line of credit for up to $40 million. The ~~line of credit~~loan agreement matures in ~~2022,~~five years, with an option to extend the maturity date subject to certain conditions, and bears interest at 90 day LIBOR plus 350 basis points (3.50%). FFI’s obligations under the loan agreement are secured by, among other things, a pledge of all of its equity in FFB. We are required to meet certain financial covenants during the term of the loan, including minimum capital levels and limits on classified assets. ~~FFI’s obligations under~~As of December 31, 2019 and March 31, 2020, FFI was in compliance with the covenants on this loan ~~agreement are secured by, among other things, a pledge of all of its equity in FFB.~~agreement.

The Bank also has $120 million available borrowing capacity through unsecured fed funds lines, ranging in size from $20 million to $25 million, with 5 other financial institutions and a ~~$49~~$184 million secured line with the Federal Reserve Bank. NaN of these lines had outstanding borrowings as of September 30, 2019. Combined, the Bank’s unused lines of credit as of September 30, 2019 and December 31, 2018 were $1.9 billion and $1.5 billion, respectively. The average balance of the term advance was $53 million for the first nine months of 2019. The average balance of overnight borrowings during the first nine months of 2019 was $581 million, as compared to $557 million during all of 2018.

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

these lines had outstanding borrowings as of March 31, 2020. Combined, the Bank’s unused lines of credit as of March 31, 2020 and December 31, 2019 were $1.8 billion and $1.4 billion, respectively. The average balance of overnight borrowings during the first three months of 2020 was $126 million, as compared to $413 million during all of 2019.

~~TheCompanyadoptedASU2016-02,~~ ~~Leases(Topic842),~~ on~~January~~1,~~2019,usingthealternativetransitionmethodwherebycomparativeperiodswerenotrestated.~~No~~cumulativeeffectadjustment totheopeningbalance~~of~~retainedearningswasrequired.~~

The Company leases certain facilities for its corporate offices and branch operations under non-cancelable operating leases that expire through 2026. All leases were classified as operating leases and therefore, were previously not recognized on the Company’s consolidated balance sheet. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability.

Certain leases include options to renew, with renewal terms that can extend the lease term. The depreciable life of leased assets ~~are~~is limited by the expected lease term.

~~Adoption~~of~~thisstandardresulted~~in~~theCompanyrecognizinga rightof use asset~~of~~$21.1 million, acorrespondingleaseliability~~of~~$22.7 million onJanuary~~1,~~2019 and eliminated a $1.6 million deferred rent liability recognized under previous accounting standards.~~

Supplemental lease information at or for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 is as follows:

(dollars in thousands)
Balance Sheet:
Operating lease asset classified as other assets	$	17,644		$	15,240
Operating lease liability classified as other liabilities		19,191			16,648

Income Statement:
Operating lease cost classified as occupancy and equipment expense	$	4,437		$	1,469

Weighted average lease term, in years		4.72			4.85
Weighted average discount rate		5.76	%		3.62	%
Operating cash flows	$	4,434		$	1,534

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used.

The table below summarizes the maturity of remaining lease liabilities at ~~September 30, 2019:~~March 31, 2020:

(dollars in thousands)
2019	$	1,545
2020		6,052		$	4,482
2021		5,498			6,023
2022		4,607			5,147
2023 and after		3,895
2023					2,305
2024 and after					3,211
Total future minimum lease payments	$	21,597		$	21,168
Discount on cash flows		(2,406	)		(4,520	)
Total lease liability	$	19,191		$	16,648

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

Basic earnings per share excludes dilution and is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if contracts to issue common stock were exercised or converted into common stock that would then share in earnings. The following table sets forth the Company’s unaudited earnings per share calculations for the ~~periods indicated:~~

Based on a weighted average basis, restricted stock units to purchase 118,750 shares of common stock were excluded for the three months ended March 31, 2020 because their effect would have been anti-dilutive.

For the ~~Nine~~Three Months Ended ~~September 30, 2019~~March 31, 2020 – UNAUDITED

For the ~~quarter~~quarters ended March 31, 2020 and ~~nine months ended September 30,~~ 2019, ~~and 2018,~~ the Company had 2 reportable business segments: Banking (FFB and FFIS) and Wealth Management (FFA). The results of FFI and any elimination entries are included in the column labeled Other. The following tables show key operating results for each of our business segments used to arrive at our consolidated totals for the following periods:

(dollars in thousands)	Banking		Wealth Management		Other			Total		(dollars in thousands)		Banking				Wealth Management				Other					Total
Quarter ended September 30, 2019:
Quarter ended March 31, 2020:										Quarter ended March 31, 2020:
Interest income	$	62,614	$	—	$	−		$	62,614	Interest income		$		62,338		$		—		$		—			$		62,338
Interest expense		19,328		—		154			19,482	Interest expense				17,440				—				30					17,470
Net interest income		43,286		—		(154	)		43,132	Net interest income				44,898				—				(30	)				44,868
Provision for loan losses		172		—		—			172	Provision for loan losses				4,079				—				—					4,079
Noninterest income		8,173		6,161		(352	)		13,982	Noninterest income				4,659				6,488				(472	)				10,675
Noninterest expense		26,397		5,423		874			32,694	Noninterest expense				26,229				6,165				463					32,857
Income (loss) before taxes on income	$	24,890	$	738	$	(1,380	)	$	24,248	Income (loss) before taxes on income		$		19,249		$		323		$		(965	)		$		18,607

Quarter ended March 31, 2019:
Interest income											$		60,544		$		—		$		—			$		60,544
Interest expense													19,482				—				15					19,497
Net interest income													41,062				—				(15		)			41,047
Provision for loan losses													540				—				—					540
Noninterest income													2,994				5,731				(260		)			8,465
Noninterest expense													26,587				5,518				840					32,945
Income (loss) before taxes on income											$		16,929		$		213		$		(1,115		)	$		16,027

Banking

Wealth Management

Other

Total

Nine months ended September 30, 2019:

Interest income

$
186,466

$
—

$
−

$
186,466

Interest expense

60,132

—

268

60,400

Net interest income

126,334

—

(268
)

126,066

Provision for loan losses

1,943

—

—

1,943

Noninterest income

14,638

17,874

(934
)

31,578

Noninterest expense

78,785

16,508

2,628

97,921

Income (loss) before taxes on income

$
60,244

$
1,366

$
(3,830
)

$
57,780

Nine months ended September 30, 2018:

Interest income

$
149,864

$
—

$
—

$
149,864

Interest expense

34,049

—

1,570

35,619

Net interest income

115,815

—

(1,570
)

114,245

Provision for loan losses

4,147

—

—

4,147

Noninterest income

8,586

18,920

(436
)

27,070

Noninterest expense

76,896

16,333

3,708

96,937

Income (loss) before taxes on income

$
43,358

$
2,587

$
(5,714
)

$
40,231

On ~~October 29, 2019,~~April 28, 2020, the Board of Directors of the Company declared a quarterly cash dividend of ~~$0.05~~$0.07 per common share to be paid on ~~December 16, 2019~~June 15, 2020 to stockholders of record as of the close of business on ~~December 2, 2019.~~

The following discussion and analysis is intended to facilitate the understanding and assessment of significant changes and trends in our businesses that accounted for the changes in our results of operations in the quarter ~~and nine months~~ ended ~~September 30, 2019~~March 31, 2020 as compared to our results of operations in the quarter ~~and nine months~~ ended ~~September 30, 2018;~~March 31, 2019; and our financial condition at ~~September 30, 2019~~March 31, 2020 as compared to our financial condition at December 31, ~~2018.~~2019. This discussion and analysis is based on and should be read in conjunction with our consolidated financial statements and the accompanying notes thereto contained elsewhere in this report and our audited consolidated financial statements for the year ended December 31, ~~2018,~~2019, and the notes thereto, which are set forth in Item 8 of our Annual Report on Form 10-K (our ~~“2018~~“2019 10-K”) which we filed with the Securities and Exchange Commission (“SEC”) on March ~~1, 2019.~~2, 2020.

Statements contained in this report that are not historical facts or that discuss our expectations, beliefs or views regarding our future financial performance or future financial condition, or financial or other trends in our business or in the markets in which we operate, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Often, they include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “forecast” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Such forward-looking statements are based on current information that is available to us, and on assumptions that we make, about future events or economic or financial conditions or trends over which we do not have control. In addition, our businesses and the markets in which we operate are subject to a number of risks and uncertainties. Those risks and uncertainties, and unexpected future events, could cause our financial condition or actual operating results in the future to differ, possibly significantly, from our expected financial condition and operating results that are set forth in the forward-looking statements contained in this report.

The principal risks and uncertainties to which our businesses are subject are discussed in Item 1A2 of this report and in our ~~2018~~2019 10-K ~~and in this Item 2 below.~~under the heading “Risk Factors”. Therefore, you are urged to read not only the information contained under the heading “Risk Factors” in ~~this~~ Item 2, but also the risk factors and other cautionary information contained in ~~Item 1A of~~ our ~~2018~~2019 10-K under the heading “Risk Factors” which qualify the forward-looking statements contained in this report.

The COVID-19 pandemic has created economic and financial disruptions that have adversely affected, and may continue to adversely affect, our business, operations, financial performance and prospects. Even after the COVID-19 pandemic subsides, it is possible that the U.S. and other major economies experience or continue to experience a prolonged recession, which could materially and adversely affect our business, operations, financial performance and prospects. Statements about the effects of the COVID-19 pandemic on our business, operations, financial performance and prospects may constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us.

Due to these risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements contained in this report and not to make predictions about our future financial performance based solely on our historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this report or in our ~~2018~~2019 10-K, except as may otherwise be required by applicable law or government regulations.

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and accounting practices in the banking industry. Certain of those accounting policies are considered critical accounting policies, because they require us to make estimates and assumptions regarding circumstances or trends that could materially affect the value of those assets, such as economic conditions or trends that could impact our ability to fully collect our loans or ultimately realize the carrying value of certain of our other assets. Those estimates and assumptions are made based on current information available to us regarding those economic conditions or trends or other circumstances. If changes were to occur in the events, trends or other circumstances on which our estimates or assumptions were based, or other unanticipated events were to occur that might affect our operations, we may be required under GAAP to adjust our earlier estimates and to reduce the carrying values of the affected assets on our balance sheet, generally by means of charges against income, which could also affect our results of operations in the fiscal periods when those charges are recognized.

Allowance for Credit Losses. We adopted CECL to compute our allowance for credit losses (“ACL”) on January 1, 2020. Our ACL is established through a provision for credit losses charged to expense and may be reduced by a recapture of previously established loss reserves, which are also reflected in the income statement. Loans are charged against the ACL when management believes that collectability of the principal is unlikely. The CECL model requires the ACL to cover estimated credit losses expected over the life of an exposure. This evaluation takes into consideration such factors as current economic projections, projected payment estimates, changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and certain other factors that may affect the borrower’s ability to pay. While we use the best information available to make this evaluation, future adjustments to our ACL may be necessary if there are significant changes in economic or other conditions that can affect the collectability in full of loans in our loan portfolio.

Utilization and Valuation of Deferred Income Tax Benefits. We record as a “deferred tax asset” on our balance sheet an amount equal to the tax credit and tax loss carryforwards and tax deductions (collectively “tax benefits”) that we believe will be available to us to offset or reduce income taxes in future periods. Under applicable federal and state income tax laws and regulations, tax benefits related to tax loss carryforwards will expire if they cannot be used within specified periods of time. Accordingly, the ability to fully use our deferred tax asset related to tax loss carryforwards to reduce income taxes in the future depends on the amount of taxable income that we generate during those time periods. At least once each year, or more frequently, if warranted, we make estimates of future taxable income that we believe we are likely to generate during those future periods. If we conclude, on the basis of those estimates and the amount of the tax benefits available to us, that it is more likely than not that we will be able to fully utilize those tax benefits prior to their expiration, we recognize the deferred tax asset in full on our balance sheet. On the other hand, if we conclude on the basis of those estimates and the amount of the tax benefits available to us that it has become more likely than not that we will be unable to utilize those tax benefits in full prior to their expiration, then we would establish a valuation allowance to reduce

the deferred tax asset on our balance sheet to the amount with respect to which we believe it is still more likely than not that we will be able to use to offset or reduce taxes in the future. The establishment of such a valuation allowance, or any increase in an existing valuation allowance, would be effectuated through a charge to the provision for income taxes or a reduction in any income tax credit for the period in which such valuation allowance is established or increased.

~~Allowance for Loan and Lease Losses.~~ Our ALLL is established through a provision for loan losses charged to expense and may be reduced by a recapture of previously established loss reserves, which are also reflected in the income statement. Loans are charged against the ALLL when management believes that collectability of the principal is unlikely. The ALLL is an amount that management believes will be adequate to absorb estimated losses on existing loans that may become uncollectible based on an evaluation of the collectability of loans and prior loan loss experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions and certain other subjective factors that may affect the borrower’s ability to pay. While we use the best information available to make this evaluation, future adjustments to our ALLL may be necessary if there are significant changes in economic or other conditions that can affect the collectability in full of loans in our loan portfolio.

We have two business segments, “Banking” and “Wealth Management.” Banking includes the operations of FFB and FFIS and Wealth Management includes the operations of FFA. The financial position and operating results of the stand-alone holding company, FFI, are included under the caption “Other” in certain of the tables that follow, along with any consolidation elimination entries.

~~During~~The COVID-19 pandemic has caused economic and social disruption on an unprecedented scale. While some industries have been impacted more severely than others, all businesses have been impacted to some degree. This disruption has resulted in the shuttering of businesses across the country, significant job loss, and aggressive measures by the federal government.

Congress, the President, and the Federal Reserve have taken several actions designed to cushion the economic fallout. Most notably, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law at the end of March 2020 as a $2 trillion legislative package. The goal of the CARES Act is to prevent a severe economic downturn through various measures, including direct financial aid to American families and economic stimulus to significantly impacted industry sectors. The package also includes extensive emergency funding for hospitals and providers. In addition to the general impact of COVID-19, certain provisions of the CARES Act as well as other recent legislative and regulatory relief efforts could have a material impact on our operations and financial results. The following is a list of the impacts that are considered significant at this time.

In response to the potential impact on liquidity resulting from the COVID-19 pandemic and to encourage banks to work with borrowers, FASB issued accounting guidelines that do not require forbearance or restructuring of loans completed as a result of the COVID-19 pandemic to be classified as troubled debt restructures.

Upon the World Health Organization’s pandemic declaration, we implemented our Pandemic Response Business Continuity Plan, under which we moved approximately 85% of our corporate employees to a remote working strategy and implemented protocols for the safety of our clients and employees. The transition to working remotely was achieved within a week and did not require any significant costs due to our existing technology platform in place. Additional costs associated with the safety protocols, such as additional cleaning and supplies has been offset by reduced costs for parking, meals, entertainment and travel. We have implemented alternative procedures, such as electronic signatures and approvals, to maintain effective internal controls over our financial reporting processes.

Our financial position and results of operations through the first quarter have been impacted by increases in the allowance for credit losses as current economic projections, used in our CECL modeling, contemplate a significant adverse impact on the economy

in the coming months resulting in higher estimates of credit losses. Due to the significant decrease in rates, our funding costs started to decline in March and are expected to decline over the course of the year if the current interest rate environment persists.

Potential impacts to our future financial position and results of operation include:

As previously mentioned, our funding costs have and are expected to continue to decrease. We do not expect any significant impact to our liquidity or contingent liquidity sources at this time. Due to available funding sources, we do not expect reduced cash flows caused by forbearances, loans issued under PPP, servicing advances or increases in delinquencies to have a material adverse impact on our liquidity position.

The significant decrease in the value of stocks caused by the COVID-19 pandemic caused a 12% decrease in our assets under management during the first quarter of ~~2019, we sold $551 million~~2020 which will result in reduced revenues in future quarters. This will adversely impact the results of ~~multifamily loans through a securitization, we sold $284 million~~our Wealth Management operations in future periods.

Our results of ~~lower yielding securities and we purchased $576 million of securities issued in the securitization.~~

~~During~~operations for the first ~~nine months~~quarter of 2019, loan originations totaled $1.4 billion, total deposits increased by $638 million and total revenues (net interest income and noninterest income) increased by 12% when compared to the first nine months of 2018.2020 include:

Our net income for the quarter and nine months ending September 30, 2019 was $17.4 million and $41.0 million, respectively, as compared to $14.7 million and $28.8 million, respectively, for the quarter and nine months ending September 30, 2018. Income before taxes for the quarter and nine months ending September 30, 2019 was $24.2 million and $57.8 million, respectively, as compared to $20.9 million and $40.2 million for the corresponding periods in 2018.

Our effective tax rate for the quarter and nine months ended September 30, 2019 was 28.4% and 29.0%, respectively, as compared to 29.5% and 28.3% for the quarter and nine months ended September 30, 2018, and as compared to our statutory tax rate of 29.0%.

The primary sources of revenue for Banking are net interest income, fees from its deposits and trust services, gains on sales of loans, certain loan fees, and consulting ~~services and loan~~ fees. The primary ~~source~~sources of revenue for Wealth Management isare asset management fees assessed on the balance of assets under management (“AUM”). Compensation and benefit costs, which represent the largest component of noninterest expense, accounted for ~~50%~~53% and ~~76%~~74%, respectively, of the total noninterest expense for Banking and Wealth Management in the first ~~nine months~~quarter of ~~2019.~~2020.

The following table shows key operating results for each of our business segments for the quarter ended ~~September 30:~~March 31:

(dollars in thousands)

Banking

Wealth Management

Other

Total

2019:

Interest income

$
62,614

$
—

$
−

$
62,614

Interest expense

19,328

—

154

19,482

Net interest income

43,286

—

(154
)

43,132

Provision for loan losses

172

—

—

172

Noninterest income

8,173

6,161

(352
)

13,982

Noninterest expense

26,397

5,423

874

32,694

Income (loss) before taxes on income

$
24,890

$
738

$
(1,380
)

$
24,248

2018:

Interest income

$
58,047

$
—

$
—

$
58,047

Interest expense

13,786

—

535

14,321

Net interest income

44,261

—

(535
)

43,726

Provision for loan losses

9

—

—

9

Noninterest income

5,079

6,260

(235
)

11,104

Noninterest expense

27,530

5,189

1,248

33,967

Income (loss) before taxes on income

$
21,801

$
1,071

$
(2,018
)

$
20,854

~~General.~~ Our net income and income before taxes in the third quarter of 2019 were $17.4 million and $24.2 million, respectively, as compared to $14.7 million and $20.9 million, respectively, in the third quarter of 2018. The $3.4 million increase in income before taxes was the result of a $3.1 million increase in income before taxes for Banking, a $0.3 million decrease in income before taxes for Wealth Management and a $0.7 million decrease in corporate expenses. The increase in Banking was due to higher noninterest income and lower noninterest expenses. The decrease in Wealth Management was due to lower noninterest income and higher noninterest expenses.

~~The following table shows key operating results for each of our business segments for the nine months ended September 30:~~

(dollars in thousands)	Banking		Wealth Management		Other			Total		Banking		Wealth Management		Other			Total
2020:
Interest income										$	62,338	$	—	$	—		$	62,338
Interest expense											17,440		—		30			17,470
Net interest income											44,898		—		(30	)		44,868
Provision for credit losses											4,079		—		—			4,079
Noninterest income											4,659		6,488		(472	)		10,675
Noninterest expense											26,229		6,165		463			32,857
Income (loss) before taxes on income										$	19,249	$	323	$	(965	)	$	18,607
2019:
Interest income	$	186,466	$	—	$	−		$	186,466	$	60,544	$	—	$	—		$	60,544
Interest expense		60,132		—		268			60,400		19,482		—		15			19,497
Net interest income		126,334		—		(268	)		126,066		41,062		—		(15	)		41,047
Provision for loan losses		1,943		—		—			1,943
Noninterest income		14,638		17,874		(934	)		31,578
Noninterest expense		78,785		16,508		2,628			97,921
Income (loss) before taxes on income	$	60,244	$	1,366	$	(3,830	)	$	57,780
2018:
Interest income	$	149,864	$	—	$	—		$	149,864
Interest expense		34,049		—		1,570			35,619
Net interest income		115,815		—		(1,570	)		114,245
Provision for loan losses		4,147		—		—			4,147
Provision for credit losses											540		—		—			540
Noninterest income		8,586		18,920		(436	)		27,070		2,994		5,731		(260	)		8,465
Noninterest expense		76,896		16,333		3,708			96,937		26,587		5,518		840			32,945
Income (loss) before taxes on income	$	43,358	$	2,587	$	(5,714	)	$	40,231	$	16,929	$	213	$	(1,115	)	$	16,027

General. Our net income and income before taxes in the first ~~nine months~~quarter of ~~2019~~2020 were ~~$41.0~~$13.2 million and ~~$57.8~~$18.6 million, respectively, as compared to ~~$28.8~~$11.3 million and ~~$40.2~~$16.0 million, respectively, in the first ~~nine months~~quarter of ~~2018.~~2019. The ~~$17.6~~$2.6 million increase in income before taxes was the result of a ~~$16.9~~$2.3 million increase in income before taxes for Banking, a ~~$1.2~~$0.1 million ~~decrease~~increase in income before taxes for Wealth Management, ~~and~~ a ~~$2.2~~$0.2 million decrease in corporate noninterest income and a $0.4 million decrease in corporate noninterest expenses. The increase in Banking was due to higher ~~net~~ interest income ~~a lower provision for loan losses~~ and higher noninterest income which were partially offset by a higher provision for credit losses and higher noninterest expenses. The increase in Wealth Management was due to higher noninterest income which was partially offset by higher noninterest expenses. The decrease in ~~Wealth Management~~corporate expenses was due to ~~lower noninterest income and higher~~decreases in noninterest expenses.

Net Interest Income. The following tables set forth, for the periods indicated, information regarding (i) the total dollar amount of interest income from interest-earning assets and the resultant average yields on those assets; (ii) the total dollar amount of interest

expense and the average rate of interest on our interest-bearing liabilities; (iii) net interest income; (iv) net interest rate spread; and (v) net yield on interest-earning assets:

	Quarter Ended September 30:														Quarter Ended March 31:
	2019							2018							2020							2019
(dollars in thousands)	Average Balances		Interest		Average Yield / Rate			Average Balances		Interest		Average Yield / Rate			Average Balances		Interest		Average Yield / Rate			Average Balances		Interest		Average Yield / Rate
Interest-earning assets:
Loans	$	5,282,338	$	56,483		4.27	%	$	4,929,164	$	53,345		4.32	%	$	5,082,152	$	54,884		4.32	%	$	4,835,920	$	53,835		4.46	%
Securities		616,424		5,349		3.47	%		516,057		3,579		2.77	%		999,625		6,997		2.80	%		802,503		6,165		3.07	%
FHLB stock, fed funds, and deposits		86,839		782		3.57	%		163,929		1,123		2.72	%		62,020		457		2.96	%		48,801		544		4.52	%
Total interest-earning assets		5,985,601		62,614		4.18	%		5,609,150		58,047		4.13	%		6,143,797		62,338		4.06	%		5,687,224		60,544		4.27	%

Noninterest-earning assets:
Nonperforming assets		18,001							9,742							11,924							12,226
Other		206,065							155,098							173,929							184,081
Total assets	$	6,209,667						$	5,773,990						$	6,329,650						$	5,883,531

Interest-bearing liabilities:
Demand deposits	$	370,681	$	897		0.96	%	$	414,503	$	935		0.89	%	$	359,410	$	726		0.81	%	$	313,084	$	732		0.95	%
Money market and savings		1,194,714		3,946		1.31	%		1,201,909		2,836		0.94	%		1,373,321		4,395		1.29	%		1,173,837		3,350		1,16	%
Certificates of deposit		1,988,265		11,832		2.36	%		1,608,400		7,671		1.89	%		1,973,176		9,525		1.94	%		2,018,270		11,366		2.28	%
Total interest-bearing deposits		3,553,660		16,675		1.86	%		3,224,812		11,442		1.41	%		3,705,907		14,646		1.59	%		3,505,191		15,448		1.79	%
Borrowings		486,807		2,807		2.29	%		482,753		2,879		2.37	%		682,936		2,824		1.66	%		637,036		4,049		2.58	%
Total interest-bearing liabilities		4,040,467		19,482		1.91	%		3,707,565		14,321		1.53	%		4,388,843		17,470		1.60	%		4,142,227		19,497		1.91	%

Noninterest-bearing liabilities:
Demand deposits		1,508,290							1,520,153							1,266,328							1,124,318
Other liabilities		72,424							23,918							57,036							58,077
Total liabilities		5,621,181							5,251,636							5,712,207							5,324,622
Shareholders’ equity		588,486							522,354							617,443							558,909
Total liabilities and equity	$	6,209,667						$	5,773,990						$	6,329,650						$	5,883,531

Net Interest Income			$	43,132						$	43,726						$	44,868						$	41,047

Net Interest Rate Spread						2.27	%						2.60	%						2.46	%						2.36	%

Net Yield on Interest-earning Assets						2.89	%						3.12	%						2.92	%						2.88	%

Nine Months Ended September 30:

2019

2018

(dollars in thousands)

Average
Balances

Interest

Average
Yield / Rate

Average
Balances

Interest

Average
Yield / Rate

Interest-earning assets:

Loans

$
5,062,689

$
166,828

4.40
%

$
4,418,421

$
135,851

4.10
%
Securities

732,262

17,700

3.22
%

519,181

10,576

2.72
%
FHLB stock, fed funds, and deposits

61,403

1,938

4.22
%

185,989

3,437

2.47
%
Total interest-earning assets

5,856,354

186,466

4.25
%

5,123,591

149,864

3.90
%

Noninterest-earning assets:

Nonperforming assets

15,123

11,017

Other

193,176

99,249

Total assets

$
6,064,653

$
5,233,857

Interest-bearing liabilities:

Demand deposits

$
333,838

$
2,392

0.96
%

$
336,975

$
2,061

0.82
%
Money market and savings

1,181,657

10,972

1.24
%

1,125,995

7,390

0.88
%
Certificates of deposit

2,004,574

35,055

2.34
%

1,268,607

15,947

1.68
%
Total interest-bearing deposits

3,520,069

48,419

1.84
%

2,731,577

25,398

1.24
%
Borrowings

640,267

11,981

2.50
%

675,435

10,221

2.02
%
Total interest-bearing liabilities

4,160,336

60,400

1.94
%

3,407,012

35,619

1.40
%

Noninterest-bearing liabilities:

Demand deposits

1,270,845

1,354,188

Other liabilities

60,639

��

20,852

Total liabilities

5,491,820

4,782,052

Shareholders’ equity

572,833

451,805

Total liabilities and equity

$
6,064,653

$
5,233,857

Net Interest Income

$
126,066

$
114,245

Net Interest Rate Spread

2.31
%

2.50
%

Net Yield on Interest-earning Assets

2.87
%

2.97
%

Net interest income is impacted by the volume (changes in volume multiplied by prior rate), interest rate (changes in rate multiplied by prior volume) and mix of interest-earning assets and interest-bearing liabilities. The following table provides a breakdown of the changes in net interest income due to volume and rate changes for the first quarter ~~and nine months~~ ended ~~September 30, 2019,~~March 31, 2020, as compared to the ~~corresponding periods~~first quarter in ~~2018:~~2019:

	Quarter Ended September 30, 2019 vs. 2018									Nine Months Ended September 30, 2019 vs. 2018								Increase (Decrease) due to						Net Increase (Decrease)
(dollars in thousands)	Increase (Decrease) due to:										Increase (Decrease) due to:							Volume			Rate			Net Increase (Decrease)
		Volume			Rate			Total			Volume			Rate		Total
Interest earned on:
Loans	$	3,783		$	(645	)	$	3,138		$	20,784		$	10,193	$	30,977		$	2,741		$	(1,692	)	$	1,049
Securities		772			998			1,770			4,903			2,221		7,124			1,413			(581	)		832
Fed funds, FHLB stock, and deposits		(626	)		285			(341	)		(3,095	)		1,596		(1,499	)
FHLB stock, fed funds and deposits																			131			(218	)		(87	)
Total interest-earning assets		3,929			638			4,567			22,592			14,010		36,602			4,285			(2,491	)		1,794

Interest paid on:
Demand deposits		(103	)		65			(38	)		(21	)		352		331			108			(114	)		(6	)
Money market and savings		(8	)		1,118			1,110			381			3,201		3,582			642			403			1,045
Certificates of deposit		2,048			2,113			4,161			11,412			7,696		19,108			(156	)		(1,685	)		(1,841	)
Borrowings		23			(95	)		(72	)		(555	)		2,315		1,760			310			(1,535	)		(1,225	)
Total interest-bearing liabilities		1,960			3,201			5,161			11,217			13,564		24,781			904			(2,931	)		(2,027	)
Net interest income	$	1,969		$	(2,563	)	$	(594	)	$	11,375		$	446	$	11,821		$	3,381		$	440		$	3,821

Net interest income for Banking ~~decreased $1.0~~increased $3.8 million from ~~$44.3~~$41.1 million in the ~~third~~first quarter of ~~2018,~~2019, to ~~$43.3~~$44.9 million in the ~~third~~first quarter of ~~2019 as a decrease~~2020 due to an 8% increase in interest-earning assets and an increase in the net yield on interest earning ~~assets was partially offset by a 7% increase in interest-earning~~ assets. On a consolidated basis, the net yield on interest-earning assets ~~decreased~~increased from ~~3.12%~~2.88% in the first quarter of 2019 to ~~2.89% as~~2.92% in the ~~decrease~~first quarter of 2020 due primarily to an increase in the

net interest rate spread. The net interest rate spread increased from 2.36% in the first quarter of 2019 to 2.46% in the first quarter of 2020 due to a decrease in costs of interest-bearing liabilities which was partially offset by a ~~larger benefit derived from noninterest bearing funding sources, including noninterest-bearing deposits and equity, as~~decrease in yield on interest ~~rates rise.~~earning assets. The ~~net interest rate spread~~yield on interest-earning assets decreased from ~~2.60%~~4.27% in the ~~third~~first quarter of ~~2018~~2019 to ~~2.27%~~4.06% in the first quarter of 2020 due to decreases in yields on loans and securities and an increase in the proportion of lower yielding securities and deposits to total interest-earning assets. The yield on loans decreased due to accelerated payoffs of higher yielding loans during the last year and the decrease in market rates which resulted in lower rates on loans added to the portfolio. The yield on securities decreased due to the purchase of $576 million of securities in the third quarter of 2019 ~~due to an increase~~at current market rates which were lower than the overall yield realized in 2019. The decrease in the cost of interest-bearing liabilities from ~~1.53% in the third quarter of 2018 to~~ 1.91% in the ~~third~~first quarter of 2019 ~~which was partially offset by an increase in yield on interest-earning assets from 4.13%~~to 1.60% in the ~~third~~first quarter of ~~2018 to 4.18% in the third quarter of 2019. The yield on interest-earning assets increased due primarily to higher yields on securities. The increase in the yield on securities~~2020 was due to the acquisition of higher yielding securities at the end of the third quarter in 2018 and the sale of lower yielding securities in the first half of the third quarter of 2019. The increase in the cost of interest-bearing liabilities was due to increaseddecreased costs of interest-bearing deposits, resulting from ~~increases~~decreases in deposit market rates, and a decrease in the cost of borrowings due to decreases in the Fed Funds rates which strongly influences our borrowing rates. The average balance outstanding under the holding company line of credit ~~decreased~~increased from ~~$36.8 million in the third quarter of 2018 to $10.5 million in the third quarter of 2019, resulting in a $0.4 million decrease in corporate interest expense.~~

~~Net interest income for Banking increased 9% from $115.8~~$1.1 million in the first ~~nine months~~quarter of ~~2018,~~2019 to ~~$126.3~~$2.5 million in the first ~~nine months~~quarter of 2019 due primarily to a 14% increase in interest-earning assets which was partially offset by a decrease in our net yield on interest earning assets. On a consolidated basis our net yield on interest earning assets was 2.87% for the first nine months of 2019 as compared to 2.97% in the first nine months of 2018. This decrease was due to a decrease in the net interest rate spread from 2.50% in the first nine months of 2018 to 2.31% in the first nine months of 2019, the effects of which were partially offset by a larger benefit derived from noninterest bearing funding sources, including noninterest-bearing deposits and equity, as interest rates rise. The decrease in the net interest rate spread was due to an increase in the cost of interest-bearing liabilities from 1.40% in the first nine months of 2018 to 1.94% in the first nine months of 2019 which was partially offset by an increase in yield on total interest-earning assets from 3.90% in the first nine months of 2018 to 4.25% in the first nine months of 2019. The yield on interest-earning assets increased as new loans added to the portfolio bear interest rates higher than the current portfolio rates as a result of increases in market rates. The increase in the cost of interest-bearing liabilities was due to increased costs of interest-bearing deposits, resulting from increases in deposit market rates, and increased costs of borrowings as the average rate on FHLB advances and other overnight borrowings increased from 1.81% in the first nine months of 2018 to 2.47% in the first nine months of 2019. The average balance outstanding under the holding company line of credit decreased from $37.7 million in the first nine months of 2018 to $6.0 million in the first nine months of 2019, resulting in a $1.3 million decrease in corporate interest expense.2020.

Provision for ~~loan~~credit losses. The provision for ~~loan~~credit losses represents our estimate of the amount necessary to be charged against the current period’s earnings to maintain the ~~ALLL~~ACL at a level that we consider adequate in relation to the estimated losses inherent in the loan portfolio. The provision for ~~loan~~credit losses is impacted by changes in loan balances as well as changes in estimated loss assumptions and charge-offs and recoveries. The amount of the provision also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions and certain other subjective factors that may affect the ability of borrowers to meet their repayment obligations to us. ~~For~~The provision for credit losses in the first quarter of 2020 and ~~nine months ended September 30,~~ 2019 ~~we recorded provisions~~was $4.1 million and $0.5 million, respectively. The $4.1 million provision for ~~loan~~credit losses in the first quarter of 2020 was impacted by the adverse change in economic conditions required to be contemplated under CECL and a $1.8 million charge related to impairment in an interest only strip security. The provision for credit losses of $0.2 million and $1.9 million, respectively, as compared to a negligible amount of provisions and $4.1 million, respectively, for the quarter and nine months ended September 30, 2018. Net recoveries were $0.1 million and net chargeoffs were $0.4$0.5 million for the first quarter ~~and nine months ended September 30,~~of 2019 ~~respectively, as compared~~was due to ~~a negligible net amount of chargeoffs and~~ net chargeoffs of ~~$3.5~~$0.3 million ~~for~~and the ~~quarter and nine months ended September 30, 2018, respectively.~~growth in loan balances during the quarter.

Noninterest income. Noninterest income for Banking includes fees charged to clients for trust services and deposit services, consulting fees, prepayment and late fees charged on loans, gain on sale of loans, and gains and losses from capital market activities and insurance commissions. The following table provides a breakdown of noninterest income for Banking for the ~~quarter and nine months~~quarters ended ~~September 30:~~March 31:

Noninterest income in Banking in the third quarter of 2019 was $3.1 million higher than the third quarter of 2018 due to a higher gain on sale of loans and higher trust fees. The $2.9 million higher gain on sale was due to the benefits of a decreasing interest rate environment in 2019 which was offset by a $19.9 million payout on a swap used to hedge the sale of loans.

Noninterest income in Banking in the first ~~nine months~~quarter of ~~2019~~2020 was ~~$6.0~~$1.7 million higher than the ~~corresponding period in 2018~~first quarter of 2019 due to a ~~higher gain on sale of loans, higher trust~~$1.4 million increase in loan fees and ~~higher loan fees, including prepayment and servicing fees. The $3.8 million higher gain on sale was due to the benefits of~~ a ~~decreasing interest rate environment in 2019. The $1.0~~$0.3 million increase in trust ~~fees relates primarily to new clients, some of which were transferred from or referred by Wealth Management.~~fees. The ~~$1.0 million~~ increase in loan fees was due primarily to higher prepayment fees and higher servicing fees.

Noninterest income for Wealth Management ~~represents~~includes fees charged to high net-worth clients for managing their ~~assets.~~assets and for providing financial planning consulting services. The following table provides ~~a breakdown~~the amounts of noninterest income for Wealth Management for the ~~periods indicated:~~quarters ended March 31:

Noninterest income for Wealth Management ~~decreased~~increased by ~~$0.1~~$0.8 million ~~and $1.0 million for~~in the ~~third~~first quarter ~~and first nine months~~ of ~~2019, respectively, as~~2020 when compared to the first quarter of 2019 due to higher investment management fees as a result of a corresponding ~~periods~~increase in ~~2018 due primarily to lower levels of~~ AUM.

Noninterest Expense. The following table provides a breakdown of noninterest expense for Banking and Wealth Management for the periods indicated:

	Banking				Wealth Management				Banking				Wealth Management
(dollars in thousands)	2019		2018		2019		2018		2020		2019		2020		2019
Quarter Ended September 30:
Quarter Ended March 31:
Compensation and benefits	$	12,613	$	13,215	$	4,185	$	3,994	$	14,833	$	14,309	$	4,582	$	4,234
Occupancy and depreciation		4,814		4,987		578		544		4,867		4,241		609		587
Professional services and marketing		1,173		1,056		474		466		1,186		1,240		781		528
Customer service costs		5,920		4,854		—		—		2,372		3,389		—		—
Other expenses		1,877		3,418		186		185		2,971		3,408		193		169
Total noninterest expense	$	26,397	$	27,530	$	5,423	$	5,189	$	26,229	$	26,587	$	6,165	$	5,518

Nine Months Ended September 30:
Compensation and benefits	$	39,774	$	38,028	$	12,549	$	12,283
Occupancy and depreciation		13,630		12,690		1,716		1,688
Professional services and marketing		3,519		3,338		1,702		1,800
Customer service costs		13,592		11,449		—		—
Other expenses		8,270		11,391		541		562
Total noninterest expense	$	78,785	$	76,896	$	16,508	$	16,333

Noninterest expense in Banking decreased from $27.5 million in the third quarter of 2018 to $26.4 million in the third quarter of 2019 due to lower compensation costs and a $1.2 million refund received from the FDIC for deposit insurance fees which was partially offset by an increase in customer service costs. The lower compensation costs are due to higher levels of deferred fees related to the higher loan production levels. The Bank qualified for the FDIC small bank credit and received a $1.2 million credit in the third quarter which was offset against FDIC fees owed. The Bank does not expect to receive any additional credits from the FDIC. Customer service costs for Banking increased from $4.9 million in the third quarter of 2018 to $5.9 million in the third quarter of 2019 due to increases in the earnings credit rates paid on the related deposit balances. Noninterest expenses for Wealth Management increased by $0.2 million in the third quarter of 2019, when compared to the third quarter of 2018, due to increased compensation costs. The $0.3 million decrease in corporate expenses was due to one-time compliance consulting costs incurred in 2018.

~~Noninterest expense in Banking increased from $76.9~~$26.6 million in the first ~~nine months~~quarter of ~~2018~~2019 to ~~$78.8~~$26.2 million in the first ~~nine months~~quarter of ~~2019,~~2020 primarily due to ~~increases in staffing~~lower customer service costs and other ~~costs associated with the Bank’s expansion, including the acquisition of PBB in June 2018, and increases in customer service costs~~expenses, which were partially offset by ~~a $4.1~~higher compensation and benefits and occupancy and depreciation. The $1.0 million decrease in ~~merger related~~customer service costs ~~and a $1.2 million refund received from the FDIC for deposit insurance fees. Compensation and benefits for Banking increased $1.7 million~~was due to lower rates paid as interest rates declined during the first ~~nine months~~quarter of 2019 as compared to the first nine months of 2018 due to salary increases and an increase in the FTE in Banking, which increased to 422.7 in the first nine months of 2019 from 373.4 in the first nine months of 2018 as a result of the increased staffing related to the PBB acquisition and additional personnel added to support the growth in loans and deposits. The $0.9 million increase in occupancy and depreciation for Banking in the first nine months of 2019 as compared to the first nine months of 2018 was due to costs related to the PBB acquisition and increases in our data processing costs due to increased volumes. Customer service costs for Banking increased from $11.4 million in the first nine months of 2018 to $13.6 million in the first nine months of 2019 due to increases in the earnings credit rates paid on the related deposit balances which was partially offset by lower average balances.2020. Other expenses decreased by ~~$3.1~~$0.4 million due to lower FDIC costs. Compensation and benefits were $0.5 million higher due to raises effective in the first ~~nine months~~quarter of ~~2019 when compared~~2020 and commission costs related to ~~the corresponding period in 2018 due to a $4.1 million decrease in merger related costs which was partially offset by increases~~higher loan production volume in the ~~amortization~~first quarter of 2020. Occupancy and depreciation costs were $0.6 million higher due primarily to higher core ~~deposit intangibles~~processing costs related to higher volumes and ~~FDIC insurance. Increases in FDIC insurance were offset by a $1.2 million refund received from the FDIC for deposit insurance fees in the third quarter of~~services added during 2019. Noninterest expenses for Wealth Management increased by ~~$0.2~~$0.6 million ~~for~~in the first ~~nine months~~quarter of ~~2019, when compared to the comparable period in 2018, due to increased compensation costs. The $0.9 million decrease in corporate expenses for the first nine months of 2019,~~2020, when compared to the first ~~nine months~~quarter of ~~2018, was~~2019, due to ~~lower~~higher compensation and benefits and professional services and marketing ~~costs~~expenses. Compensation and ~~$0.5~~benefits were $0.3 million ~~one-time compliance consulting~~higher due to raises effective in the first quarter of 2020 and compensation paid on the higher levels of income. Professional services and marketing expenses were $0.3 million higher due to costs incurred ~~in 2018.~~on a legal matter.

The following table shows the financial position for each of our business segments, and of FFI and elimination entries used to arrive at our consolidated totals which are included in the column labeled Other and Eliminations, as of:

(dollars in thousands)	Banking		Wealth Management		Other and Eliminations			Total		Banking		Wealth Management		Other and Eliminations			Total
September 30, 2019:
March 31, 2020:
Cash and cash equivalents	$	268,280	$	4,222	$	(4,056	)	$	268,446	$	39,764	$	2,269	$	(1,674	)	$	40,359
Securities AFS		1,042,940		—		—			1,042,940		961,477		—		—			961,477
Loans held for sale		501,860		—		—			501,860		520,721		—		—			520,721
Loans, net		4,353,708		—		—			4,353,708		4,782,513		—		—			4,782,513
Premises and equipment		7,860		698		136			8,694		7,762		671		136			8,569
FHLB Stock		17,250		—		—			17,250		21,168		—		—			21,168
Deferred taxes		9,375		187		(28	)		9,534		8,717		143		272			9,132
REO		—		—		—			—
Goodwill and intangibles		97,717		—		—			97,717		96,672		—		—			96,672
Other assets		42,998		277		14,922			58,197		59,739		332		13,026			73,097
Total assets	$	6,341,988	$	5,384	$	10,974		$	6,358,346	$	6,498,533	$	3,415	$	11,760		$	6,513,708

Deposits	$	5,180,755	$	—	$	(10,189	)	$	5,170,566	$	5,040,658	$	—	$	(9,831	)	$	5,030,827
Borrowings		500,000		—		20,000			520,000		784,000		—		10,000			794,000
Intercompany balances		5,866		523		(6,389	)		—		1,305		605		(1,910	)		—
Other liabilities		41,614		3,026		18,780			63,420		46,714		2,137		16,947			65,798
Shareholders’ equity		613,753		1,835		(11,228	)		604,360		625,856		673		(3,446	)		623,083
Total liabilities and equity	$	6,341,988	$	5,384	$	10,974		$	6,358,346	$	6,498,533	$	3,415	$	11,760		$	6,513,708

December 31, 2018:
December 31, 2019:
Cash and cash equivalents	$	67,148	$	4,636	$	(4,472	)	$	67,312	$	65,083	$	5,054	$	(4,750	)	$	65,387
Securities AFS		809,569		—		—			809,569		1,014,966		—		—			1,014,966
Loans held for sale		507,643		—		—			507,643		503,036		—		—			503,036
Loans, net		4,274,669		—		—			4,274,669		4,526,833		—		—			4,526,833
Premises and equipment		8,221		788		136			9,145		7,561		658		136			8,355
FHLB Stock		20,307		—		—			20,307		21,519		—		—			21,519
Deferred taxes		12,905		103		243			13,251		10,778		133		168			11,079
REO		815		—		—			815
Goodwill and Intangibles		99,482		—		—			99,482		97,191		—		—			97,191
Other assets		35,906		605		1,708			38,219		51,229		445		14,396			66,070
Total assets	$	5,836,665	$	6,132	$	(2,385	)	$	5,840,412	$	6,298,196	$	6,290	$	9,950		$	6,314,436

Deposits	$	4,544,168	$	—	$	(11,200	)	$	4,532,968	$	4,902,958	$	—	$	(11,814	)	$	4,891,144
Borrowings		703,000		—		5,000			708,000		733,000		—		10,000			743,000
Intercompany balances		3,689		467		(4,156	)		—		3,111		469		(3,580	)		—
Other liabilities		34,886		2,830		2,544			40,260		48,159		3,400		14,864			66,423
Shareholders’ equity		550,922		2,835		5,427			559,184		610,968		2,421		480			613,869
Total liabilities and equity	$	5,836,665	$	6,132	$	(2,385	)	$	5,840,412	$	6,298,196	$	6,290	$	9,950		$	6,314,436

Our consolidated balance sheet is primarily affected by changes occurring in our Banking operations as our Wealth Management ~~does~~operations do not maintain significant levels of assets. Banking has experienced and is expected to continue to experience increases in its total assets as a result of our growth strategy.

During the first ~~nine months~~quarter of ~~2019,~~2020, total assets increased by ~~$518~~$199 million primarily due to ~~increases~~an increase in ~~cash, securities and~~ loans, including loans held for ~~sale.~~sale which was partially offset by a decrease in securities. During the ~~third~~first quarter of ~~2019, we sold through a securitization $551~~2020, securities decreased by $53 million primarily due to payoffs of multifamily loans, sold $284 million of lower yielding securities at a $0.3 million loss and purchased $576 million of securities from the securitization. As a result, securities increased $269 million during the third quarter and $233 million year to date.mortgage backed securities. Loans and loans held for sale increased ~~$75~~$276 million in the first ~~nine months~~quarter of ~~2019~~2020 as a result of ~~$1.4 billion~~$663 million of originations and an $8 million positive mark to market valuation on our loans held for sale related to our hedging activities which were partially offset by ~~the sale of $551 million of loans and~~ payoffs or scheduled payments of ~~$749~~$395 million. The ~~$638~~mark to market valuation is offset by a corresponding $8 million recorded in other liabilities. The $140 million growth in deposits during the first ~~nine months~~quarter of ~~2019~~2020 included increases in branch deposits of ~~$92~~$171 million and specialty deposits of ~~$541~~$53 million and an $84 million decrease in wholesale ~~deposits of $5 million.~~deposits. Borrowings ~~decreased~~increased by ~~$188~~$51 million during the first ~~nine months~~quarter of ~~2019 as cash provided by the increase in deposits, which exceeded~~2020 primarily to support the growth in our ~~assets, was used to pay down our borrowings at the Bank.~~total assets. At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the outstanding balance on the holding company line of credit was ~~$20 million and $5 million, respectively.~~$10 million.

Cash and cash equivalents, certificates of deposit and securities. Cash and cash equivalents, which primarily consist of funds held at the Federal Reserve Bank or at correspondent banks, including fed funds, ~~increased $201~~decreased by $25 million during the first ~~nine~~three months of ~~2019.~~2020. Changes in cash and cash equivalents are primarily affected by the funding of loans, investments in securities, and changes in our sources of funding: deposits, FHLB advances and FFI borrowings.

Securities available for sale. The following table provides a summary of the Company’s AFS securities portfolio as of:

	Amortized		Gross Unrealized					Estimated		Amortized		Gross Unrealized					Estimated
(dollars in thousands)	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
September 30, 2019:
March 31, 2020:
Agency mortgage-backed securities	$	925,132	$	10,715	$	(209	)	$	935,638	$	855,835	$	17,589	$	(10,613	)	$	862,811
Beneficial interest – FHLMC securitization		50,983		1,808		(2,753	)		50,038		40,433		878		(2,896	)		38,415
Corporate bonds		54,000		1,827		—			55,827		57,000		1,921		(135	)		58,786
Other		1,380		57		—			1,437		1,392		73		—			1,465
Total	$	1,031,495	$	14,407	$	(2,962	)	$	1,042,940	$	954,660	$	20,461	$	(13,644	)	$	961,477

December 31, 2018:
December 31, 2019:
Agency mortgage-backed securities	$	723,597	$	11,883	$	(13,811	)	$	721,669	$	905,949	$	9,174	$	(146	)	$	914,977
Beneficial interest – FHLMC securitization		32,143		1,756		(1,813	)		32,086		47,586		1,801		(6,681	)		42,706
Corporate bonds		54,000		638		(294	)		54,344		54,000		1,834		—			55,834
Other		1,458		15		(3	)		1,470		1,386		63		—			1,449
Total	$	811,198	$	14,292	$	(15,921	)	$	809,569	$	1,008,921	$	12,872	$	(6,827	)	$	1,014,966

The US Treasury ~~securities of $0.4 million as of September 30, 2019 that are included in the table above as Other~~Securities are pledged as collateral to the State of California to meet regulatory requirements related to ~~the Bank’s~~FFB’s trust operations. As of September 30, 2019, $151 million of agency mortgage-backed securities are pledged as collateral as support for the Bank’s obligations under loan sales and securitization agreements entered into in 2019 and 2018.

The scheduled maturities of securities AFS, other than agency mortgage-backed securities, and the related weighted average yield is as follows as of ~~September 30, 2019:~~March 31, 2020:

(dollars in thousands)	Less than 1 Year			1 Through 5 years			5 Through 10 Years			After 10 Years			Total			Less than 1 Year			1 Through 5 years			5 Through 10 Years			After 10 Years			Total
Amortized Cost:
Corporate bonds	$	—		$	—		$	54,000		$	—		$	54,000		$	—		$	—		$	57,000		$	—		$	57,000
Other		—			400			979			—			1,379			—			400			992			—			1,392
Total	$	—			400			54,979			—			55,379		$	—			400			57,992			—			58,392
Weighted average yield		—	%		2.21	%		5.29	%		—	%		5.27	%		—	%		2.26	%		5.35	%		—	%		5.33	%

Estimated Fair Value:
Corporate bonds	$	—		$	—		$	55,827		$	—		$	55,827		$	—		$	—		$	58,786		$	—		$	58,786
Other		—			403			1,032			—			1,435			—			409			1,056			—			1,465
Total	$	—		$	403		$	56,859		$	—		$	57,262		$	—		$	409		$	59,842		$	—		$	60,251

Agency mortgage-backed securities and beneficial ~~interest –~~interests in FHLMC securitizations are excluded from the above table because such securities are not due at a single maturity date. The weighted average yield of the agency mortgage-backed securities and beneficial interests in FHLMC securitizations as of ~~September 30, 2019~~March 31, 2020 was ~~2.87%~~2.37%.

(dollars in thousands)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Outstanding principal balance:
Loans secured by real estate:
Residential properties:
Multifamily	$	1,941,624	$	1,956,935	$	2,369,081	$	2,143,919
Single family		896,607		904,828		851,443		871,181
Total real estate loans secured by residential properties		2,838,231		2,861,763		3,220,524		3,015,100
Commercial properties		871,225		869,169		793,182		834,042
Land		71,110		80,187		68,101		70,257
Total real estate loans		3,780,566		3,811,119		4,081,807		3,919,399
Commercial and industrial loans		566,390		449,805		696,596		600,213
Consumer loans		16,505		22,699		17,476		16,273
Total loans		4,363,461		4,283,623		4,795,879		4,535,885
Premiums, discounts and deferred fees and expenses		10,747		10,046		9,634		11,748
Total	$	4,374,208	$	4,293,669	$	4,805,513	$	4,547,633

~~Total loans, including~~Loans and loans held for sale increased ~~$75~~$276 million ~~during~~in the first ~~nine months~~quarter of ~~2019~~2020 as a result of ~~$1.4 billion~~$663 million of originations and an $8 million positive mark to market valuation on our loans held for sale related to our hedging activities which were partially offset by ~~the sale of $551 million of multifamily loans and~~ payoffs or scheduled payments of ~~$749~~$395 million.

Deposits. The following table sets forth information with respect to our deposits and the average rates paid on deposits, as of:

	September 30, 2019					December 31, 2018					March 31, 2020					December 31, 2019
(dollars in thousands)	Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate
Demand deposits:
Noninterest-bearing	$	1,532,105		—		$	1,074,661		—		$	1,315,114		—		$	1,192,481		—
Interest-bearing		350,344		0.670	%		317,380		0.798	%		384,215		0.436	%		386,276		0.635	%
Money market and savings		1,316,899		1.367	%		1,190,717		1.115	%		1,380,903		0.849	%		1,334,736		1.355	%
Certificates of deposits		1,971,218		2.221	%		1,950,210		2.142	%		1,950,595		1.732	%		1,977,651		1.971	%
Total	$	5,170,566		1.240	%	$	4,532,968		1.270	%	$	5,030,827		0.938	%	$	4,891,144		1.217	%

During the first ~~nine~~three months of ~~2019,~~2020, our deposit rates stabilized in a manner consistent with overall deposit market rates. The weighted average rate of our interest bearing deposits ~~increased~~decreased from ~~1.67%~~1.61% at December 31, ~~2018~~2019 to ~~1.76%~~1.27% at ~~September 30, 2019,~~March 31, 2020 due to decreased costs of interest-bearing deposits, while the weighted average interest rates of both interest-bearing and noninterest-bearing deposits have decreased from ~~1.27%~~1.22% at December 31, ~~2018~~2019 to ~~1.24%~~0.94% at ~~September 30, 2019.~~March 31, 2020. The financial impact of the increase in noninterest-bearing deposits is reflected in customer service costs, which are included in noninterest expenses.

The maturities of our certificates of deposit of $100,000 or more were as follows as of ~~September 30, 2019:~~March 31, 2020:

(dollars in thousands)
3 months or less	$	242,444	$	239,420
Over 3 months through 6 months		138,733		366,633
Over 6 months through 12 months		276,786		177,600
Over 12 months		9,610		10,321
Total	$	667,573	$	793,974

From time to time, the Bank will utilize brokered deposits as a source of funding. As of ~~September 30, 2019~~March 31, 2020 the Bank held ~~$1.2~~$1.3 billion of deposits which are classified as brokered deposits.

Borrowings. At ~~September 30, 2019~~March 31, 2020, our borrowings consisted of ~~a $500~~$34 million of overnight FHLB advances at the Bank, $750 million in FHLB term ~~advance~~advances at the Bank and ~~$20~~$10 million of borrowings ~~on our~~under a holding company line of credit. At December 31, ~~2018,~~2019, our borrowings consisted of ~~$703~~$233 million of overnight FHLB advances at ~~FFB~~the Bank, a $500 million FHLB term advance at the Bank, and $5$10 million of borrowings ~~on our~~under a holding company line of credit. ~~The~~$500 million and $250 million of the FHLB ~~advance~~term advances outstanding at ~~September 30, 2019 matures~~March 31, 2020 mature in September 2020 and ~~bears~~March 2021, respectively, and bear interest ~~at a rate~~rates of 1.77%. and 0.47%, respectively. The overnight FHLB ~~overnight~~ advances were paid in full in the early part of April 2020 and January ~~2019.~~2020, respectively, and bore interest rates of 0.21% and 1.66%, respectively. Because FFB generally utilizes overnight borrowings, the balance of outstanding borrowings may fluctuate on a daily basis. The average balance of FHLB advances ~~and other borrowings~~ outstanding during the first ~~nine months~~quarter of ~~2019~~2020 was ~~$640~~$681 million, as compared to ~~$607~~$636 million for the first ~~nine months~~quarter of ~~2018.~~2019. The weighted average interest rate on these borrowings was ~~2.50%~~1.65% for the first ~~nine months~~quarter of ~~2019,~~2020, as compared to ~~2.33%~~2.57% for the first ~~nine months~~quarter of ~~2018.~~2019. The maximum amount of borrowings at the Bank outstanding at any month-end during the first ~~nine months~~quarter of ~~2019~~2020 and during all of ~~2018~~2019 was ~~$956~~$784 million and ~~$773~~$956 million, respectively.

Loans are considered past due following the date when either interest or principal is contractually due and unpaid. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full, timely collection of interest or principal and, generally, when a loan becomes contractually past due for 90 days or more with respect to principal or interest. However, the accrual of interest may be continued on a well-secured loan contractually past due 90 days or more with respect to principal or interest if the loan is in the process of collection or collection of the principal and interest is deemed probable. The following tables provide a summary of past due and nonaccrual loans as of:

(dollars in thousands)	30–59 Days			60-89 Days			90 Days or More			Nonaccrual			Total Past Due and Nonaccrual			Current		Total		30–59 Days			60-89 Days			90 Days or More			Nonaccrual			Total Past Due and Nonaccrual			Current		Total
September 30, 2019:
March 31, 2020:
Real estate loans:
Residential properties	$	14		$	—		$	—		$	1,452		$	1,466		$	2,836,765	$	2,838,231	$	—		$	—		$	—		$	1,704		$	1,704		$	3,226,037	$	3,227,741
Commercial properties		—			1,089			—			7,575			8,664			862,561		871,225		—			—			399			2,355			2,754			790,561		793,315
Land		3,262			—			—			697			3,959			67,151		71,110		500			—			—			—			500			67,525		68,025
Commercial and industrial loans		3,937			87			106			11,478			15,608			550,782		566,390		1,023			233			—			5,173			6,429			692,441		698,870
Consumer loans		—			—			—			—			—			16,505		16,505		2			—			—			18			20			17,542		17,562
Total	$	7,213		$	1,176		$	106		$	21,202		$	29,697		$	4,333,764	$	4,363,461	$	1,525		$	233		$	399		$	9,250		$	11,407		$	4,794,106	$	4,805,513

Percentage of total loans		0.17	%		0.03	%		—	%		0.49	%		0.68	%						0.03	%		0.00	%		0.01	%		0.19	%		0.24	%

December 31, 2018:
December 31, 2019:
Real estate loans:
Residential properties	$	74		$	—		$	499		$	651		$	1,224		$	2,860,539	$	2,861,763	$	89		$	13		$	—		$	1,743		$	1,845		$	3,013,255	$	3,015,100
Commercial properties		440			117			—			1,607			2,164			867,005		869,169		7,586			—			403			2,410			10,399			823,643		834,042
Land		2,000			—			—			697			2,697			77,490		80,187		—			—			—			—			—			70,257		70,257
Commercial and industrial loans		12,541			300			536			8,559			21,936			427,869		449,805		695			2,007			—			8,714			11,416			588,797		600,213
Consumer loans		—			7			—			2			9			22,690		22,699		22			3			—			—			25			16,248		16,273
Total	$	15,055		$	424		$	1,035		$	11,516		$	28,030		$	4,255,593	$	4,283,623	$	8,392		$	2,023		$	403		$	12,867		$	23,685		$	4,512,200	$	4,535,885

Percentage of total loans		0.35	%		0.01	%		0.02	%		0.27	%		0.65	%						0.19	%		0.04	%		0.01	%		0.28	%		0.52	%

The following table presents the composition of TDRs by accrual and nonaccrual status as of:

	September 30, 2019							December 31, 2018					March 31, 2020							December 31, 2019
(dollars in thousands)	Accrual			Nonaccrual	Total			Accrual	Nonaccrual		Total		Accrual			Nonaccrual	Total			Accrual	Nonaccrual		Total
Residential real estate loans													$	1,200	$	—	$	1,200	$	1,200	$	—	$	1,200
Commercial real estate loans	$	1,207	$	2,206	$	3,413	$	1,264	$	1,491	$	2,755		1,168		1,405		2,573		1,188		2,166		3,354
Commercial and industrial loans		—		2,883		2,883		—		2,096		2,096		618		3,531		4,149		557		2,972		3,529
Total		1,207	$	5,089		6,296		1,264		3,587		4,851	$	2,986	$	4,936	$	7,922	$	2,945	$	5,138	$	8,083

These loans were classified as a TDR as a result of a reduction in required principal payments, reductions in rates and/or an extension of the maturity date of the loans.

The following is a breakdown of our loan portfolio by the risk category of loans as of:

(dollars in thousands)	Pass		Special Mention		Substandard		Impaired		Total		Pass		Special Mention		Substandard		Loans Individually Evaluated		Total
September 30, 2019:
March 31, 2020:
Real estate loans:
Residential properties	$	2,835,650	$	1,155	$	—	$	1,426	$	2,838,231	$	3,224,832	$	—	$	—	$	2,909	$	3,227,741
Commercial properties		851,578		688		7,066		11,893		871,225		781,902		1,227		2,871		7,315		793,315
Land		69,625		—		788		697		71,110		68,025		—		—		—		68,025
Commercial and industrial loans		547,235		689		6,949		11,517		566,390		683,273		7,646		236		7,715		698,870
Consumer loans		16,505		—		—		—		16,505		17,544		—		—		18		17,562
Total	$	4,320,593	$	2,532	$	14,803	$	25,533	$	4,363,461	$	4,775,576	$	8,873	$	3,107	$	17,957	$	4,805,513

December 31, 2018:
December 31, 2019:
Real estate loans:
Residential properties	$	2,857,666	$	3,446	$	—	$	651	$	2,861,763	$	3,012,203	$	—	$	—	$	2,897	$	3,015,100
Commercial properties		845,672		13,024		7,602		2,871		869,169		821,425		679		5,249		6,689		834,042
Land		78,681		—		809		697		80,187		69,476		—		781		—		70,257
Commercial and industrial loans		431,751		7,723		1,772		8,559		449,805		579,153		8,202		3,542		9,316		600,213
Consumer loans		22,699		—		—		—		22,699		16,273		—		—		—		16,273
Total	$	4,236,469	$	24,193	$	10,183	$	12,778	$	4,283,623	$	4,498,530	$	8,881	$	9,572	$	18,902	$	4,535,885

We consider a loan to be impaired when, based upon current information and events, we believe that it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan. We measure impairment using either the present value of the expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the properties collateralizing the loan, for collateral dependent loans. Impairment losses are included in the ALLL through a charge to provision for loan losses. Adjustments to impairment losses due to changes in the fair value of the property collateralizing an impaired loan are considered in computing the provision for loan losses. Loans collectively reviewed for impairment include all loans except for loans which are individually reviewed based on specific criteria, such as delinquency, debt coverage, adequacy of collateral and condition of property collateralizing the loans. Impaired loans include nonaccrual loans (excluding those collectively reviewed for impairment), certain restructured loans and certain performing loans less than 90 days delinquent (“other impaired loans”) which we believe are not likely to be collected in accordance with the contractual terms of the loans.

In 2017 and 2018, we purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of these purchased credit impaired loans is as follows as of:

Allowance for ~~Loan~~Credit Losses. The following table summarizes the activity in our ~~ALLL~~ACL for the periods indicated:

(dollars in thousands)	Beginning Balance		Provision for Loan Losses			Charge-offs			Recoveries		Ending Balance		Beginning Balance		Provision for Credit Losses			Charge-offs			Recoveries		Ending Balance
Quarter ended September 30, 2019:
Quarter ended March 31, 2020:
Real estate loans:
Residential properties	$	8,702	$	(575	)	$	—		$	—	$	8,127	$	8,423	$	(2,034	)	$	—		$	—	$	6,389
Commercial properties		4,560		5			—			—		4,565		4,166		772			—			—		4,938
Land		471		102			—			—		573		573		771			—			—		1,344
Commercial and industrial loans		6,261		648			(1,279	)		1,407		7,037		7,448		2,756			(530	)		451		10,125
Consumer loans		206		(8	)		—			—		198		190		14			—			—		204
Total	$	20,200	$	172		$	(1,279	)	$	1,407	$	20,500	$	20,800	$	2,279		$	(530	)	$	451	$	23,000

Nine months ended September 30, 2019:
Year ended December 31, 2019:
Real estate loans:
Residential properties	$	9,216	$	(1,089	)	$	—		$	—	$	8,127	$	9,216	$	(793	)	$	—		$	—	$	8,423
Commercial properties		4,547		18			—			—		4,565		4,547		(381	)		—			—		4,166
Land		391		182			—			—		573		391		182			—			—		573
Commercial and industrial loans		4,628		2,848			(2,208	)		1,769		7,037		4,628		3,653			(2,687	)		1,854		7,448
Consumer loans		218		(16	)		(5	)		1		198		218		(24	)		(5	)		1		190
Total	$	19,000	$	1,943		$	(2,213	)	$	1,770	$	20,500	$	19,000	$	2,637		$	(2,692	)	$	1,855	$	20,800
Year ended December 31, 2018:
Real estate loans:
Residential properties	$	9,715	$	(499	)	$	—		$	—	$	9,216
Commercial properties		4,399		359			(211	)		—		4,547
Land		395		(4	)		—			—		391
Commercial and industrial loans		3,624		4,413			(3,978	)		569		4,628
Consumer loans		267		(49	)		—			—		218
Total	$	18,400	$	4,220		$	(4,189	)	$	569	$	19,000

Excluding the loans acquired in acquisitions, our ~~ALLL~~ACL represented ~~0.52%~~0.48% and ~~0.51%~~0.49% of total loans outstanding as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

The amount of the ~~ALLL~~ACL is adjusted periodically by charges to operations (referred to in our income statement as the “provision for ~~loan~~credit losses”) (i) to replenish the ~~ALLL~~ACL after it has been reduced due to loan write-downs or charge-offs, (ii) to reflect increases in the volume of outstanding loans, and (iii) to take account of changes in the risk of potential ~~loan~~credit losses due to a deterioration in the condition of borrowers, or in the value of property securing non–performing loans, or adverse changes in economic conditions. The amounts of the provisions we make for ~~loan~~credit losses are based on our estimate of losses in our loan portfolio. In estimating such losses, we use economic and loss migration models that are based on bank regulatory guidelines and industry standards, and our historical charge-off experience and loan delinquency rates, local and national economic conditions, a borrower’s ability to repay its borrowings, and the value of any property collateralizing the loan, as well as a number of subjective factors. However, these determinations involve judgments about changes and trends in current economic conditions and other events that can affect the ability of borrowers to meet their loan obligations to us and a weighting among the quantitative and qualitative factors we consider in determining the sufficiency of the ~~ALLL.~~ACL. Moreover, the duration and anticipated effects of prevailing economic conditions or trends can be uncertain and can be affected by a number of risks and circumstances that are outside of our control. If

changes in economic or market conditions or unexpected subsequent events were to occur, or if changes were made to bank regulatory guidelines or industry standards that are used to assess the sufficiency of the ~~ALLL,~~ACL, it could become necessary for us to incur additional, and possibly significant, charges to increase the ~~ALLL,~~ACL, which would have the effect of reducing our income.

In addition, the FDIC and the DBO, as an integral part of their examination processes, periodically review the adequacy of our ~~ALLL.~~ACL. These agencies may require us to make additional provisions for ~~loan~~credit losses, over and above the provisions that we have already made, the effect of which would be to reduce our income.

The following table presents the balance in the ~~ALLL~~ACL and the recorded investment in loans by impairment method as of:

	Allowance for Loan Losses								Unaccreted Credit		Allowance for Credit Losses								Unaccreted Credit
	Evaluated for Impairment				Purchased				Component		Evaluated for Impairment								Component
(dollars in thousands)	Individually		Collectively		Impaired		Total		Other Loans		Individually		Collectively		PCD		Total		Other Loans
September 30, 2019:
Allowance for loan losses:
March 31, 2020:
Allowance for credit losses:
Real estate loans:
Residential properties	$	—	$	8,127	$	—	$	8,127	$	1,167	$	—	$	6,389	$	—	$	6,389
Commercial properties		111		4,454		—		4,565		1,277		—		4,938		—		4,938
Land		—		573		—		573		25		—		1,344		—		1,344
Commercial and industrial loans		282		6,755		—		7,037		326		1,189		8,936		—		10,125
Consumer loans		—		198		—		198		1		19		185		—		204
Total	$	393	$	20,107	$	—	$	20,500	$	2,796	$	1,208	$	21,792	$	—	$	23,000
Loans:
Real estate loans:
Residential properties	$	1,426	$	2,836,805	$	—	$	2,838,231	$	200,542	$	2,909	$	3,224,832	$	—	$	3,227,741
Commercial properties		12,688		855,157		3,380		871,225		235,633		7,315		783,129		2,871		793,315
Land		697		69,625		788		71,110		34,562		—		68,025		—		68,025
Commercial and industrial loans		10,722		555,045		623		566,390		29,060		7,715		690,919		236		698,870
Consumer loans		—		16,505		—		16,505		285		18		17,544		—		17,562
Total	$	25,533	$	4,333,137	$	4,791	$	4,363,461	$	500,082	$	17,957	$	4,784,449	$	3,107	$	4,805,513

	Allowance for Loan Losses								Unaccreted Credit		Allowance for Credit Losses								Unaccreted Credit
	Evaluated for Impairment				Purchased				Component		Evaluated for Impairment								Component
(dollars in thousands)	Individually		Collectively		Impaired		Total		Other Loans		Individually		Collectively		PCI		Total		Other Loans
December 31, 2018:
Allowance for loan losses:
December 31, 2019:
Allowance for credit losses:
Real estate loans:
Residential properties	$	—	$	9,216	$	—	$	9,216	$	1,724	$	—	$	8,423	$	—	$	8,423	$	1,013
Commercial properties		126		4,421		—		4,547		1,779		107		4,059		—		4,166		1,048
Land		—		391		—		391		84		—		573		—		573		6
Commercial and industrial loans		290		4,338		—		4,628		633		763		6,685		—		7,448		277
Consumer loans		—		218		—		218		3		—		190		—		190		1
Total	$	416	$	18,584	$	—	$	19,000	$	4,223	$	870	$	19,930	$	—	$	20,800	$	2,345
Loans:
Real estate loans:
Residential properties	$	651	$	2,861,112	$	—	$	2,861,763	$	241,698	$	2,897	$	3,012,203	$	—	$	3,015,100	$	189,339
Commercial properties		2,871		860,835		5,463		869,169		275,516		6,689		824,026		3,327		834,042		201,370
Land		697		78,681		809		80,187		41,132		—		69,476		781		70,257		28,660
Commercial and industrial loans		8,559		440,437		809		449,805		61,183		9,316		590,489		408		600,213		24,143
Consumer loans		—		22,699		—		22,699		366		—		16,273		—		16,273		253
Total	$	12,778	$	4,263,764	$	7,081	$	4,283,623	$	619,895	$	18,902	$	4,512,467	$	4,516	$	4,535,885	$	443,765

The column labeled “Unaccreted Credit Component Other Loans” represents the amount of unaccreted credit component discount for the other loans acquired in ~~prior~~ acquisitions, and the stated principal balance of the related loans. The ~~unaccreted credit component~~ discount is equal to ~~0.56% and 0.68% of the stated principal balances of these loans~~0.53% as of ~~September 30, 2019 and~~ December 31, ~~2018, respectively.~~2019. In addition to this unaccreted credit component discount, an additional ~~$0.4~~$0.3 million of the ~~ALLL~~ACL was provided for these loans as of ~~September 30, 2019 and~~ December 31, ~~2018.~~2019.

Liquidity management focuses on our ability to generate, on a timely and cost-effective basis, cash sufficient to meet the funding needs of current loan demand, deposit withdrawals, principal and interest payments with respect to outstanding borrowings and to pay operating expenses. Our liquidity management is both a daily and long-term function of funds management. Liquid assets are generally invested in marketable securities or held as cash at the Federal Reserve Bank of San Francisco or other financial institutions.

We monitor our liquidity in accordance with guidelines established by our Board of Directors and applicable regulatory requirements. Our need for liquidity is affected by our loan activity, net changes in deposit levels and the maturities of our borrowings. The principal sources of our liquidity consist of deposits, loan interest and principal payments and prepayments, investment management and consulting fees, FHLB advances and proceeds from borrowings and sales of ~~shares by FFI.~~FFI common stock. The remaining balances of the ~~Bank’s~~Company’s lines of credit available to draw down totaled ~~$1.9~~$1.8 billion at ~~September 30, 2019.~~ March 31, 2020.

Cash Flows Provided by Operating Activities. During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2020, operating activities provided net cash of $1 million, primarily due to net income of $13 million and $4 million in provisions for credit losses, offset partially by a net increase of $7 million in other assets and $9 million decrease in other liabilities. During the quarter ended March 31, 2019, operating activities provided net cash of ~~$47~~$11 million, comprised primarily of our net income of ~~$41~~$11 million. During the nine months ended September 30, 2018, operating activities provided net cash of $42 million, comprised primarily of our net income of $29 million and $2 million decrease in other assets and $5 million increase in accounts payable and other liabilities.

Cash Flows Used in Investing Activities. During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2020, investing activities used net cash of $209 million, primarily to fund a $264 million net increase in loans and $3 million in securities purchases, offset partially by $55 million in cash received in principal collection and maturities of securities. During the quarter ended March 31, 2019, investing activities used net cash of ~~$269~~$123 million, primarily to fund a ~~$628~~$141 million net increase in loans and ~~$577~~$2 million in ~~securities~~FHLB stock purchases, offset partially by ~~$357~~$21 million in cash received in proceeds from the sale, principal collection, and maturities of ~~securities and $574 million in proceeds from the sale of~~ securities. During the nine months ended September 30, 2018, investing activities used net cash of $343 million, primarily to fund a $786 million net increase in loans and $350 million in securities purchases, offset partially by $674 million in loan sales, $67 million in cash received in proceeds from the sale, principal collection, and maturities of securities, and $48 million in cash received in the acquisition.

Cash Flow Provided by Financing Activities. During the ~~nine months~~quarter ended ~~September 30, 2019,~~March 31, 2020, financing activities provided net cash of ~~$423~~$185 million, consisting primarily of a net increase of ~~$638~~$140 million in deposits and a $51 million increase in FHLB advances, offset partially by ~~a $203~~$3 million ~~decrease~~ in ~~FHLB advances,~~dividends paid and ~~$20~~$3 million ~~cash paid~~ in ~~the settlement of a swap transaction.~~stock repurchases. During the ~~nine months~~quarter ended ~~September 30, 2018,~~March 31, 2019, financing activities provided net cash of ~~$235~~$126 million, consisting primarily of a net ~~increase~~increases of ~~$748~~$36 million in deposits and $92 million in FHLB advances, offset partially by ~~a $511~~$2 million ~~net decrease~~ in ~~FHLB advances.~~dividends paid.

Ratio of Loans to Deposits. The relationship between gross loans and total deposits can provide a useful measure of a bank’s liquidity. Since repayment of loans tends to be less predictable than the maturity of investments and other liquid resources, the higher the loan-to-deposit ratio the less liquid are our assets. On the other hand, since we realize greater yields on loans than we do on other interest-earning assets, a lower loan-to-deposit ratio can adversely affect interest income and earnings. As a result, our goal is to achieve a loan-to-deposit ratio that appropriately balances the requirements of liquidity and the need to generate a fair return on our assets. At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the loan-to-deposit ratios at ~~the Bank~~FFB were ~~94%~~106%, and ~~106%~~103%, respectively.

The following table provides the off-balance sheet arrangements of the Company as of ~~September 30, 2019:~~March 31, 2020:


(dollars in thousands)
Commitments to fund new loans	$	69,640	$	40,567
Commitments to fund under existing loans, lines of credit		464,458		430,195
Commitments under standby letters of credit		10,737		13,465

Some of the commitments to fund existing loans, lines of credit and letters of credit are expected to expire without being drawn upon. Therefore, the total commitments do not necessarily represent future cash requirements. As of ~~September 30, 2019, the Bank~~March 31, 2020, FFB was obligated on ~~$231~~$281 million of letters of credit to the FHLB which were being used as collateral for public fund deposits, including ~~$213~~$263 million of deposits from the State of California.

The capital rules applicable to United States based bank holding companies and federally insured depository institutions (“Capital Rules”) require the Company (on a consolidated basis) and FFB (on a stand-alone basis) to meet specific capital adequacy requirements that, for the most part, involve quantitative measures, primarily in terms of the ratios of their capital to their assets, liabilities, and certain off-balance sheet items, calculated under regulatory accounting practices. In addition, prompt correct action regulations place a federally insured depository institution, such as FFB, into one of five capital categories on the basis of its capital

ratios: (i) well capitalized; (ii) adequately capitalized; (iii) undercapitalized; (iv) significantly undercapitalized; or (v) critically undercapitalized. A depository institution’s primary federal regulatory agency may determine that, based on certain qualitative assessments, the depository institution should be assigned to a lower capital category than the one indicated by its capital ratios. At each successive lower capital category, a depository institution is subject to greater operating restrictions and increased regulatory supervision by its federal bank regulatory agency.

The following table sets forth the capital and capital ratios of FFI (on a consolidated basis) and FFB as of the respective dates indicated below, as compared to the respective regulatory requirements applicable to them:

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions					Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
FFI
September 30, 2019:
March 31, 2020:
CET1 capital ratio	$	499,192		10.42	%	$	215,593		4.50	%						$	522,179		10.47	%	$	224,446		4.50	%
Tier 1 leverage ratio		499,192		8.15	%		245,011		4.00	%							522,179		8.36	%		249,861		4.00	%
Tier 1 risk-based capital ratio		499,192		10.42	%		287,457		6.00	%							522,179		10.47	%		299,262		6.00	%
Total risk-based capital ratio		522,557		10.91	%		383,276		8.00	%							548,339		10.99	%		399,016		8.00	%

December 31, 2018:
December 31, 2019:
CET1 capital ratio	$	460,600		10.67	%	$	194,179		4.50	%						$	513,083		10.65	%	$	216,782		4.50	%
Tier 1 leverage ratio		460,600		8.39	%		219,694		4.00	%							513,083		8.25	%		248,798		4.00	%
Tier 1 risk-based capital ratio		460,600		10.67	%		258,906		6.00	%							513,083		10.65	%		289,043		6.00	%
Total risk-based capital ratio		481,476		11.16	%		345,207		8.00	%							537,048		11.15	%		385,390		8.00	%

FFB
September 30, 2019:
March 31, 2020:
CET1 capital ratio	$	508,516		10.65	%	$	214,861		4.50	%	$	310,354		6.50	%	$	524,928		10.56	%	$	223,788		4.50	%	$	323,249		6.50	%
Tier 1 leverage ratio		508,516		8.33	%		244,312		4.00	%		305,390		5.00	%		524,928		8.43	%		249,203		4.00	%		311,504		5.00	%
Tier 1 risk-based capital ratio		508,516		10.65	%		286,481		6.00	%		381,974		8.00	%		524,928		10.56	%		298,384		6.00	%		397,845		8.00	%
Total risk-based capital ratio		531,881		11.14	%		381,974		8.00	%		477,468		10.00	%		551,088		11.08	%		397,845		8.00	%		497,306		10.00	%

December 31, 2018:
December 31, 2019:
CET1 capital ratio	$	453,248		10.51	%	$	194,058		4.50	%	$	280,306		6.50	%	$	510,142		10.62	%	$	216,063		4.50	%	$	312,091		6.50	%
Tier 1 leverage ratio		453,248		8.26	%		219,568		4.00	%		274,461		5.00	%		510,142		8.22	%		248,119		4.00	%		310,148		5.00	%
Tier 1 risk-based capital ratio		453,248		10.51	%		258,744		6.00	%		344,992		8.00	%		510,142		10.62	%		288,084		6.00	%		384,112		8.00	%
Total risk-based capital ratio		474,124		10.99	%		344,992		8.00	%		431,240		10.00	%		534,107		11.12	%		384,112		8.00	%		480,140		10.00	%

As of each of the dates set forth in the above table, the Company exceeded the minimum required capital ratios applicable to it and FFB’s capital ratios exceeded the minimums necessary to qualify as a well-capitalized depository institution under the prompt corrective action regulations. The required ratios for capital adequacy set forth in the above table do not include the Capital Rules’ additional capital conservation buffer, though each of the Company and FFB maintained capital ratios necessary to satisfy the capital conservation buffer requirements as of the dates indicated.

~~During the first nine months of 2019, FFI made capital contributions to FFB of $10 million.~~ As of ~~September 30, 2019,~~March 31, 2020, FFI had ~~$16.2~~$11.7 million of available capital and, therefore, has the ability and financial resources to contribute additional capital to FFB, if needed.

As of ~~September 30, 2019,~~March 31, 2020, the amount of capital at FFB in excess of amounts required to be ~~Well Capitalized~~well capitalized for purposes of the prompt corrective action regulations was ~~$198~~$202 million for the ~~CET-1~~CET1 capital ratio, ~~$203~~$213 million for the Tier 1 ~~leverage ratio,~~Leverage Ratio, $127 million for the Tier 1 risk-based capital ratio and $54 million for the Total risk-based capital ratio.

The Company paid a quarterly cash dividend of ~~$0.05~~$0.07 per common share in the first ~~three quarters~~quarter of ~~2019.~~2020. It is our current intention to continue to pay quarterly dividends. The amount and declaration of future cash dividends are subject to approval by our Board of Directors and certain regulatory restrictions which are discussed in Item 1 “Business—Supervision and Regulation—Dividends and Stock Repurchases” in Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. Additionally, under the terms of the holding company line of credit agreement, FFI may only declare and pay a dividend if the total amount of dividends and stock repurchases during the current twelve months does not exceed 50% of FFI’s net income for the same twelve month period. We ~~did not pay~~paid $8.9 million in dividends ($0.20 per share) in ~~2018.~~2019.

We had no material commitments for capital expenditures as of ~~September 30, 2019.~~March 31, 2020. However, we intend to take advantage of opportunities that may arise in the future to grow our businesses, ~~including by~~which may include opening additional offices or acquiring

complementary businesses that we believe will provide us with attractive risk-adjusted ~~returns, although we do not have any immediate plans, arrangements or understandings relating to any material acquisition.~~returns. As a result, we may seek to obtain additional borrowings and to sell additional shares of our common stock to raise funds which we might need for these purposes. There is no assurance, however, that, if required, we will succeed in obtaining additional borrowings or selling additional shares of our common

stock on terms that are acceptable to us, if at all, as this will depend on market conditions and other factors outside of our control, as well as our future results of operations.

We are exposed to certain financial risks, which are discussed in detail in Management's Discussion and Analysis of Financial Condition and Results of Operations in the section titled Asset and Liability Management: Interest Rate Risk in our Annual Report on Form 10-K which we filed with the Securities and Exchange Commission on March ~~1, 2019.~~2, 2020. There have been no material changes to our quantitative and qualitative disclosures about market risk since December 31, ~~2018.~~2019.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In accordance with SEC rules, an evaluation was performed under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness, as of ~~September 30, 2019,~~March 31, 2020, of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September 30, 2019,~~March 31, 2020, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2019~~March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The following risk factor supplements, and should be read in conjunction with, the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

The COVID-19 pandemic and measures intended to prevent its spread are adversely affecting us and our customers, employees and third-party service providers, and the ultimate extent of the impacts on our business, financial condition, results of operations, liquidity and prospects is uncertain.

Global health concerns relating to the COVID-19 pandemic and related government actions taken to reduce the spread of the virus have created significant economic uncertainty and reduced economic activity, including within our market areas. Governmental authorities have implemented numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, “stay at home” orders and business limitations and shutdowns. These measures have caused significant unemployment and have negatively impacted consumer and business spending. The United States government has taken steps to attempt to mitigate some of the more severe anticipated economic effects of the virus, including the passage of the CARES Act, but there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion. Continued deterioration in general business and economic conditions caused by the COVID-19 pandemic, including further increases in unemployment rates, or turbulence in domestic or global financial markets, could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility, which could result in impairment to our goodwill in future periods. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance.

Our business is dependent upon the willingness and ability of our customers and employees to conduct banking and other financial transactions. Disruptions to our customers caused by the COVID-19 pandemic could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans, as well as reductions in loan demand, the liquidity of loan guarantors, loan collateral values (particularly in real estate), loan originations, interest and noninterest income and deposit availability. These

factors may remain prevalent for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the COVID-19 pandemic has subsided. We also could be adversely affected if key personnel or a significant number of employees were ~~disclosed~~to become unavailable due to the effects and restrictions of the COVID-19 pandemic in ~~Item 1A, under~~our market areas. Although we have business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective. In addition, we rely upon our third-party vendors to conduct business and to process, record, and monitor transactions. If any of these vendors are unable to continue to provide us with these services, it could negatively impact our ability to serve our customers.

The extent to which the ~~caption~~COVID-19 pandemic impacts our business, financial condition, results of operations, liquidity and prospects will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of the virus’s economic impact and any recession that has occurred or may occur in the future.

There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, we do not yet know the full extent of the impacts on our business, our operations or the economy as a whole. However, the effects could have a material impact on our results of operations and heighten many of our known risks described in the “Risk Factors” ~~in Part I~~section of our Annual Report on Form 10-K for the year ended December 31, ~~2018, which we filed with the SEC on March 1,~~ 2019.

The Company adopted a stock repurchase plan on October 30, 2018 for the repurchase of up to 2,200,000 shares of its common stock from time to time as market conditions allow. This plan has no stated expiration date for the repurchases. The ~~Company did not repurchase any shares~~following table presents stock repurchases we made during the first quarter ~~ended September 30, 2019. As~~ of ~~September 30, 2019,~~2020 and the maximum number of shares that may be ~~purchased~~repurchased under the program ~~was 2,162,900.~~as of March 31, 2020:

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware		20-8639702
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

18101 Von Karman Avenue, Suite 700 Irvine, CA 92612		92612
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock	FFWM	NASDAQ Global Market

		Page No.

Part I. Financial Information

Item 1.	Financial Statements	1

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2625

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4441

Item 4.	Controls and Procedures	4441

Part II. Other Information

Item 1A	Risk Factors	4441

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	4443

Item 6	Exhibits	4544

SIGNATURES		S-1


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


(dollars in thousands)		PBB Book Value		Fair Value Adjustments			Fair Value
Assets Acquired:
Cash and cash equivalents	$	47,582		$	—		$	47,582
Securities AFS		10,072			(90	)		9,982
Loans, net of deferred fees		537,885			(14,986	)		522,899
Allowance for loan losses		(3,011	)		3,011			—
Premises and equipment, net		3,811			(1,536	)		2,275
Investment in FHLB stock		3,229			—			3,229
Deferred taxes		1,451			2,398			3,849
REO		934			(109	)		825
Goodwill and Core deposit intangible		634			66,615			67,249
Other assets		6,634			(566	)		6,068
Total assets acquired	$	609,221		$	54,737		$	663,958

Liabilities Assumed:
Deposits	$	477,366		$	219		$	477,585
Borrowings		79,911			(341	)		79,570
Accounts payable and other liabilities		5,204			100			5,304
Total liabilities assumed		562,481			(22	)		562,459
Excess of assets acquired over liabilities assumed		46,740			54,759			101,499
Total	$	609,221		$	54,737		$	663,958

Consideration:
Stock issued							$	101,499


(dollars in thousands)	Nine Months Ended September 30, 2018
Net interest income	$	125,700
Provision for loan losses		4,147
Noninterest income		27,837
Noninterest expenses		100,564
Income before taxes		48,826
Taxes on income		13,676
Net income	$	35,150

Net income per share:
Basic	$	0.80
Diluted	$	0.79

Allowance for credit losses – Securities AFS
(dollars in thousands)
Balance: December 31, 2019	$	—
Provision for credit losses		1,800
Impairment recorded		(1,800	)
Balance: March 31, 2020		—

	Three Months Ended March 31, 2020				Year Ended December 31, 2019
(dollars in thousands)	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
Real estate loans:
Residential properties	$	2,974	$	13	$	1,765	$	13
Commercial properties		7,126		59		8,889		341
Land		—		—		523		—
Commercial and industrial loans		9,774		881		10,608		11
Consumer loans		6		—		—		—
Total	$	19,880	$	953	$	21,785	$	365

(dollars in thousands)	Real Estate		Cash		Equipment/ Receivables		Total		ACL Allocation
March 31, 2020:
Loans secured by Real Estate:
Residential properties
Single family	$	2,985	$	—	$	—	$	2,985	$	—
Commercial real estate loans		7,585		—		—		7,585		—
Land		—		—		—		—		—
Commercial loans		5,267		250		1,983		7,500		558
Consumer loans		—		—		—		—		—
Total	$	15,837	$	250	$	1,983	$	18,070	$	558

	Nine Months Ended September 30, 2019				Year Ended December 31, 2018
(dollars in thousands)	Average Recorded Investment		Interest Income after Impairment		Average Recorded Investment		Interest Income after Impairment
Real estate loans:
Residential properties	$	1,453	$	—	$	276	$	—
Commercial properties		9,512		222		3,459		90
Land		697		—		—		—
Commercial and industrial loans		10,080		—		9,117		—
Total	$	21,742	$	222	$	12,852	$	90

	Quarter Ended September 30, 2019				Quarter Ended September 30, 2018
(dollars in thousands, except per share amounts)	Basic		Diluted		Basic		Diluted

Net income	$	17,356	$	17,356	$	14,707	$	14,707

Basic common shares outstanding		44,639,481		44,639,481		44,405,094		44,405,094
Effect of contingent shares issuable				1,592				1,592
Effect of options and restricted stock				294,235				445,421
Diluted common shares outstanding				44,935,308				44,852,107

Earnings per share	$	0.39	$	0.39	$	0.33	$	0.33

	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
(dollars in thousands, except per share amounts)	Basic		Diluted		Basic		Diluted

Net income	$	41,025	$	41,025	$	28,829	$	28,829

Basic common shares outstanding		44,602,368		44,602,368		41,288,804		41,288,804
Effect of contingent shares issuable				1,592				1,592
Effect of options and restricted stock				272,654				500,260
Diluted common shares outstanding				44,876,614				41,790,656

Earnings per share	$	0.92	$	0.91	$	0.70	$	0.69


Quarter ended September 30, 2018:
Interest income	$	58,047	$	—	$	—		$	58,047
Interest expense		13,786		—		535			14,321
Net interest income		44,261		—		(535	)		43,726
Provision for loan losses		9		—		—			9
Noninterest income		5,079		6,260		(235	)		11,104
Noninterest expense		27,530		5,189		1,248			33,967
Income (loss) before taxes on income	$	21,801	$	1,071	$	(2,018	)	$	20,854

Nine Months Ended September 30:
Asset management fees	$	17,886			$	18,932

Purchase Dates	Total Number of Shares Purchased		Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares That May Yet Be Purchased Under the Program
January 1 to January 31, 2020	—		—	—	2,162,900
February 1 to February 29, 2020	—		—	—	2,162,900
March 1 to March 31, 2020	224,300	$	12.59	261,400	1,938,600

Exhibit No.		Description of Exhibit

3.1		Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 29, 2015).

3.2		Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on October 29, 2015).

10.1(1)		Fifth Amendment to Employment Agreement, dated March 11, 2020, by and between the Company, FFB and Scott F. Kavanaugh (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on March 13, 2020).

10.2(1)		Fifth Amendment to Employment Agreement, dated March 11, 2020, by and between the Company, FFA and Ulrich E. Keller, Jr. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on March 13, 2020).

10.3(1)		Second Amendment to Employment Agreement, dated March 11, 2020, by and between FFB and David DePillo (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on March 13, 2020).

10.4(1)		Second Amendment to Employment Agreement, dated March 11, 2020, by and between FFB and Lindsay Lawrence (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on March 13, 2020).

31.1		Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002

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	FIRST FOUNDATION INC.

Dated: ~~November 7, 2019~~May 8, 2020	By:	/s/ JOHN M. MICHEL
		John M. Michel
		Executive Vice President and Chief Financial Officer